VARIABLE ACCOUNT I OF AIG LIFE INS CO, 485BPOS, 1995-12-29

VARIABLE ACCOUNT I OF AIG LIFE INS CO
485BPOS, 1995-12-29

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<REDLINE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
DECEMBER 29, 1995.

File No. 33-58504
811-5301

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ______ [ ]
Post-Effective Amendment No. 4 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24 [X]

(Check appropriate box or boxes.)

VARIABLE ACCOUNT I
(Exact Name of Registrant)

AIG Life Insurance Company
(Name of Depositor)

One Alico Plaza, Wilmington, Delaware 19899
(Address of Depositor's Principal Executive Offices) (Zip Code)

Depositor's Telephone Number, including Area Code (302) 594-2000

Robert Liguori, Esq.
AIG Life Insurance Company
One Alico Plaza
Wilmington, Delaware 19899
(Name and Address of Agent for Service)

Copies to:

Michael Berenson, Esq. Florence Davis, Esq.
Jorden Burt Berenson American International
& Johnson LLP Group, Inc.
Suite 400 East 70 Pine Street
1025 Thomas Jefferson Street, N.W. New York, New York
10270
Washington, D.C. 20007-0805

Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this filing.
</REDLINE>

It is proposed that this filing will become effective (check
appropriate box):
<REDLINE>
[X] immediately upon filing pursuant to paragraph (b) of
Rule 485
______ on _______________ pursuant to paragraph (b) of Rule
485
______ 60 days after filing pursuant to paragraph (a)(i) of
Rule 485
______ on _______________ pursuant to paragraph (a)(i) of
Rule 485</REDLINE>

If appropriate, check the following box:

______ this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.

Registrant has declared that it registered an indefinite number
or amount of securities in accordance with Rule 24f-2 under the
Investment Company Act of 1940. Registrant filed a Rule 24f-2
notice for its most recent fiscal year on February 22, 1995.
<REDLINE>
EXPLANATORY NOTE

This Post-Effective Amendment shall not supersede or effect
Post-Effective Amendment No. 3 to this Registration Statement,
filed on April 28, 1995.</REDLINE>

CROSS REFERENCE SHEET
(required by Rule 495)
<TABLE>
<CAPTION>

Item No. Item Name Location

PART A

Item 1: Cover Page . . . . . . . . . . . . . . . . . Cover Page

Item 2: Definitions . . . . . . . . . . . . . . . . Definitions

Item 3: Synopsis . . . . . . . . . . . . . . . . . . Highlights

Item 4: Condensed Financial Information . . Condensed Financial
Information
<REDLINE>
Item 5: General Description of Registrant, The Variable Account;
Depositor, and Portfolio Companies . . . . The Company
</REDLINE>
Item 6: Deductions and Expenses . . . . Charges and Deductions

Item 7: General Description of Variable Purchasing a Contract;
Annuity Contracts . . . . . Rights under the Contracts

Item 8: Annuity Period . . . . . . . . . . . . . Annuity Period

Item 9: Death Benefit . . . . . . . . . . . . . . Death Benefit

Item 10: Purchases and Contract Value Rights under the Contracts;
Purchasing a Contract

Item 11: Redemptions . . . . . . . . . . . . . . . . Withdrawals

Item 12: Taxes . . . . . . . . . . . . . . . . . . . . . . Taxes

Item 13: Legal Proceedings . . . . . . . . . . . Not Applicable

Item 14: Table of Contents of the . . . Table of Contents of the
Statement of Additional Statement of Additional
Information Information

PART B

Item 15: Cover Page . . . . . . . . . . . . . . . . . Cover Page

Item 16: Table of Contents . . . . . . . . . . Table of Contents

Item 17: General Information and History . . General Information

Item 18: Services . . . . . . . . . . . . . . . . . . . Services

Item 19: Purchase of Securities . . . . . Purchasing a Contract;
Being Offered Charges and Deductions (Part A)

Item 20: Underwriters . . . . . . General Information/Distributor

Item 21: Calculation of . . . . . . Calculation of Performance
Performance Data Related Information

Item 22: Annuity Payments . . . . . . . . . . Annuity Provisions

Item 23: Financial Statements . . . . . . . Financial Statements

PART C

Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C to this
Registration Statement.

</TABLE>

PART A

AIG LIFE INSURANCE COMPANY
One Alico Plaza
Wilmington, Delaware 19899

INDIVIDUAL AND GROUP
VARIABLE ANNUITY CONTRACTS

issued by

VARIABLE ACCOUNT I

and

AIG LIFE INSURANCE COMPANY

The Individual Deferred Variable Annuity Contracts (the
"Individual Contracts") and Group Deferred Variable Annuity
Contracts ("Group Contracts") (collectively, the "Contracts")
described in this Prospectus provide for accumulation of Contract
Values and payment of monthly annuity payments. The Contracts
may be used in retirement plans which do not qualify for federal
tax advantages ("Non-Qualified Contracts") or in connection with
retirement plans which may qualify as Individual Retirement
Annuities ("IRA") under Section 408 of the Internal Revenue Code
of 1986, as amended (the "Code") or Section 403(b) of the Code
("403(b) Plans"). The Contracts will not be available in
connection with retirement plans designed by AIG Life Insurance
Company (the "Company") which qualify for the federal tax
advantages available under Sections 401 and 457 of the Code.
Purchasers intending to use the Contracts in connection with an
IRA or 403(b) Plan should seek competent tax advice.

<REDLINE>
Purchase payments for the Contracts will be allocated to a
segregated investment account of the Company which account has
been designated Variable Account I (the "Variable Account"). The
assets of each sub-account within the Variable Account are
invested in a corresponding portfolio as selected by the Owner
from the following 14 choices: the Conservative Investors
Portfolio, Growth Investors Portfolio, Growth Portfolio, or
Growth and Income Portfolio of the ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC. ("Alliance Funds"); the High Income Portfolio,
Growth Portfolio, Money Market Portfolio, Overseas Portfolio,
Asset Manager Portfolio, or Investment Grade Bond Portfolio of
the FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUNDS
("Fidelity Funds"); the Zero Coupon Portfolio of the DREYFUS
VARIABLE INVESTMENT FUND ("Dreyfus Fund"); the Gold and Natural
Resources Portfolio, or Worldwide Balanced Portfolio of the VAN
ECK WORLDWIDE INSURANCE TRUST ("Van Eck Funds"); or the DREYFUS
STOCK INDEX FUND. </REDLINE>

This Prospectus concisely sets forth the information a
prospective investor ought to know before investing. Additional
information about the Contracts is contained in the "Statement of
Additional Information" which is available at no charge. The
Statement of Additional Information has been filed with the
Securities and Exchange Commission and is hereby incorporated by
reference. The Table of Contents of the Statement of Additional
Information can be found on page ___ of this Prospectus. For the
Statement of Additional Information dated <REDLINE> __________
__, 1996,</REDLINE> call or write AIG Life Insurance Company;
Attention: Variable Products, One Alico Plaza, Wilmington,
Delaware 19801, 1-800-340-2765.
<REDLINE>
INQUIRIES: Purchaser inquiries can be made by calling the
service office at 1-800-340-2765.</REDLINE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR YOUR
FUTURE REFERENCE.

THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE
IN ALL STATES.
Date of Prospectus: <REDLINE> __________ __, 1996 </REDLINE>

TABLE CONTENTS

<TABLE>
<CAPTION>
PAGE

<S> <C>

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of Expenses . . . . . . . . . . . . . . . . . . . . . . .
Condensed Financial Information . . . . . . . . . . . . . . . . .
Calculation of Performance Data . . . . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Variable Account . . . . . . . . . . . . . . . . . . . . . .
<REDLINE> The Funds and the Investment Advisors . . . </REDLINE>
Charges and Deductions . . . . . . . . . . . . . . . . . . . . .
Deduction for Premium and Other Taxes . . . . . . . . . . .
Deduction for Mortality and Expense Risk Charge . . . . . .
Deduction for Deferred Sales Charge . . . . . . . . . . . .
Deduction for Administrative Charge . . . . . . . . . . . .
Deduction for Income Taxes . . . . . . . . . . . . . . . . .
Other Expenses . . . . . . . . . . . . . . . . . . . . . . .
Rights under the Contracts . . . . . . . . . . . . . . . . . . .
Annuity Period . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Benefits . . . . . . . . . . . . . . . . . . . . . .
Annuity Date . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options . . . . . . . . . . . . . . . . . . . . . .
Annuity Payments . . . . . . . . . . . . . . . . . . . . . .
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . .
Death Benefit . . . . . . . . . . . . . . . . . . . . . . .
Death of the Purchaser . . . . . . . . . . . . . . . . . . .
Purchasing a Contract . . . . . . . . . . . . . . . . . . . . . .
Application . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Payments . . . . . . . . . . . . . . . . . . . . .
Discount Purchase Programs . . . . . . . . . . . . . . . . .
Distributor . . . . . . . . . . . . . . . . . . . . . . . .
Contract Value . . . . . . . . . . . . . . . . . . . . . . . . .
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partial Withdrawal . . . . . . . . . . . . . . . . . . . . .
Total Withdrawal . . . . . . . . . . . . . . . . . . . . . .
Systematic Withdrawal Program . . . . . . . . . . . . . . .
Payment of Withdrawals . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . .
Company Tax Status . . . . . . . . . . . . . . . . . . . . .
Taxation of Annuities In General . . . . . . . . . . . . . .
Diversification Standards . . . . . . . . . . . . . . . . .
Qualified Plans . . . . . . . . . . . . . . . . . . . . . .
Individual Retirement Annuities . . . . . . . . . . . . . .
403(b) Plans . . . . . . . . . . . . . . . . . . . . . . . .

Appendix - General Account Option . . . . . . . . . . . . . . . .
Table of Contents of the Statement of Additional Information . .

</TABLE>

DEFINITIONS

Accumulation Period - The period prior to the Annuity Date.

Accumulation Unit - Accounting unit of measure used to calculate
the Contract Value prior to the Annuity Date.

Age - Age means age last birthday.

Annuitant - The person upon whose continuation of life any
annuity payment involving life contingencies depends. The
Annuitant named in the application.

Annuity Date - The date at which annuity payments are to begin.

Annuity Unit - Accounting unit of measure used to calculate
variable annuity payments.

Beneficiary - The person or persons named in the application who
will receive any benefit upon the death of the Owner (or
Annuitant as applicable) prior to the Annuity Date.

Contingent Owner - The Contingent Owner, if any, must be the
spouse of the Purchaser as named in the application, unless
changed.

Contract Anniversary - The same month and date as the Date of
Issue in each
subsequent year of the Contract or Certificate.

Contract Value - The value of all amounts accumulated under the
Contract or Certificate.

Contract Year - Any period of twelve (12) months commencing with
the Date of Issue and each Contract or Certificate Anniversary
thereafter.

Contribution Year - any period of 12 months commencing with the
date a Purchase Payment is made and ending on the same date in
each succeeding 12 month period thereafter.

Date of Issue - The date when the initial purchase payment was
invested.

Deferred Sales Charge - The sales charge that may be applied
against amounts withdrawn prior to the Annuity Date if withdrawal
is within six years of a purchase payment.

General Account - All of the Company's assets other than the
assets of the Variable Account and any other separate accounts of
the Company.
<REDLINE>
Office - The Annuity Service Office of the Company: One Alico
Plaza, 600 King Street, P.O. Box 8718, Wilmington, DE 19899.
</REDLINE>

Owner - The person designated as contract owner or certificate
owner in the application, unless changed.

Valuation Date - Each day that the New York Stock Exchange is
open for trading.

Valuation Period - The period commencing as of the close of the
New York Stock Exchange (presently 4 P.M., New York time) on each
Valuation Date and ending as of the close of the New York Stock
Exchange on the next succeeding Valuation Date.

Variable Account - A separate investment account of the Company,
designated Variable Account I, into which purchase payments will
be allocated.

HIGHLIGHTS
<REDLINE>
Purchase payments for the Individual Contracts or Group Contracts
(collectively, the "Contracts") will be allocated to a segregated
investment account of the Company which account has been
designated Variable Account I (the "Variable Account"). The
Variable Account invests in shares of the Portfolios of the
available Funds.</REDLINE>

The Contracts provide that in the event that an Owner withdraws
all or a portion of the Contract Value within the first six
contract years there may be assessed a Deferred Sales Charge.
The Deferred Sales Charge is based on a table of charges, of
which the maximum charge is currently 6% of the Contract Value
subject to a maximum of 8.5% of purchase payments. (See "Charges
and Deductions - Deduction for Deferred Sales Charge" on page
____.)

Any premium or other taxes levied by any governmental entity with
respect to the Contracts will be charged against the purchase
payments or Contract Value. Premium taxes currently imposed by
certain states on the Contracts range from 0% to 3.5%. The
Company will also deduct from any amount payable under the
Contracts any income taxes a governmental authority requires the

Company to withhold with respect to that amount. (See "Charges
and Deductions- Deduction for Premium and Other Taxes" on page
_____.)

The Company deducts from the Contract Value and/or the Variable
Account any Federal income taxes resulting from the operation of
the Variable Account. The Company does not currently anticipate
incurring any income taxes. (See "Charges and Deductions -
Deduction for Income Taxes" on page ______.)

The Company deducts for each Valuation Period an Administrative
Charge which is equal on an annual basis to 0.15% of the average
daily net asset value of the Variable Account. In addition, the
Company deducts an annual Administrative Charge which is
currently $30 per year, from the Contract Value. The
Administrative Charges are designed to reimburse the Company for
administrative expenses relating to maintenance of the Contract
and the Variable Account. The Company may increase the annual
Administrative Charge to an amount not to exceed $100 per year.
(See "Charges and Deductions - Deduction for Administrative
Charge" on page ______.)

There are deductions and expenses paid out of the assets of the
Funds which are described in the accompanying Prospectuses for
the Funds.

There is a 10% tax penalty applied to the income portion of any
premature distribution from the Contracts. However, the penalty
is not imposed on certain distributions including but not limited
to amounts received: (a) after the taxpayer reaches age 59 1/2;
(b) after the death of the Annuitant (or Owner, as applicable);
(c) if the taxpayer is totally disabled; (d) in a series of
substantially equal periodic payments made for the life of the
taxpayer or for the joint lives of the taxpayer and his
beneficiary; (e) under an immediate annuity; (f) which are
allocable to purchase payments made prior to August 14, 1982; (g)
under a qualified funding asset (as defined in Code Section
130(d)); or (h) that are purchased by an employer upon
termination of certain types of qualified plans and which are
held by the employer until the employee separates from service.
Withdrawals are deemed to be on a last-in-first-out basis. (See
"Taxes - Taxation of Annuities in General" on page _____.)

The Owner may return the Contract within twenty (20) days (the
"Free Look Period") after it is received by delivering or mailing
it to the Company's Office. The return of the Contract by mail

will be effective when the postmark is affixed to a properly
addressed and postage prepaid envelope. The Company will refund
the Contract Value. In the case of Contracts issued in
connection with an IRA the Company will refund the greater of the
purchase payment, less any withdrawals, or the Contract Value.
However, if the laws of a state require that the Company refund,
during the Free Look Period, an amount equal to the purchase
payment paid less any withdrawals, the Company will refund such
an amount.

SUMMARY OF EXPENSES

Contract Owner Transaction Expenses

<TABLE>
<CAPTION>
All Sub-Accounts

<S> <C>

Sales Loan Imposed on Purchases None
Deferred Sales Load (as a percentage of amount
surrendered):
Contract Year 1 6%
Contract Year 2 5%
Contract Year 3 4%
Contract Year 4 3%
Contract Year 5 2%
Contract Year 6 1%
Contract Year 7 and thereafter None
Exchange Fee Currently:
First 12 Per Contract Year None
Thereafter $ 10
<REDLINE>
Annual Contract Fee $ 30
</REDLINE>
Separate Account Expenses
(as a percentage of average account value)
Mortality and Expense Risk Fees 1.25%
Account Fees and Expenses .15%

Total Separate Account Annual Expenses 1.40%

</TABLE>

Annual Fund Expenses After Expense Reimbursements*

<TABLE>
<CAPTION>
Total
Management Other Portfolio
Fee Expenses Expenses

ALLIANCE
Conservative Investors 0.00 0.95 0.95
Growth Investors 0.00 0.95 0.95
Growth 0.00 0.95 0.95
Growth and Income 0.62 0.28 0.90

</TABLE>

<REDLINE>
Expenses on a hypothetical $1,000 policy, assuming 5% growth:

If you Surrender: 1 Year 3 Years 5 Years 10 Years
ALLIANCE

Conservative Investors 80 114 150 276
Growth Investors 80 114 150 276
Growth 80 114 150 276
Growth and Income 79 113 147 271

If you Annuitize: 1 Year 3 Years 5 Years 10 Years
ALLIANCE
Premier Growth 25 75 129 276
Growth & Income 25 75 129 276
Short Term Multi-Market 25 75 129 276
All Others 24 74 127 271

If you do not Surrender 1 Year 3 Years 5 Years 10 Years
ALLIANCE
Premier Growth 25 75 129 276
Growth & Income 25 75 129 276
Short Term Multi-Market 25 75 129 276
All Others 24 74 127 271

</TABLE>

Annual Fund Expenses After Expense Reimbursements

<TABLE>
<CAPTION>
Total
Management Other Portfolio
Fee Expenses Expenses

DREYFUS
Zero Coupon 2000 0.00 0.00 0.00

</TABLE>

Expenses on a hypothetical $1,000 policy, assuming 5% growth:

If you Surrender: 1 Year 3 Years
DREYFUS

Zero Coupon 2000 69 82

If you Annuitize: 1 Year 3 Years
DREYFUS
Zero Coupon 2000 15 46

If you do not Surrender 1 Year 3 Years
DREYFUS
Zero Coupon 2000 15 46

</TABLE>

Annual Fund Expenses After Expense Reimbursements

<TABLE>
<CAPTION>
Total
Management Other Portfolio
Fee Expenses Expenses

DREYFUS STOCK
INDEX FUND 0.30 0.10 0.40

</TABLE>

Expenses on a hypothetical $1,000 policy, assuming 5% growth:

If you Surrender: 1 Years 3 Years

DREYFUS STOCK
INDEX FUND 73 94

If you Annuitize: 1 Year 3 Years
DREYFUS STOCK
INDEX FUND 19 58

If you do not Surrender 1 Year 3 Years
DREYFUS STOCK
INDEX FUND 19 58

</TABLE>

Annual Fund Expenses After Expense Reimbursements

<TABLE>
<CAPTION>
Total
Management Other Portfolio
Fee Expenses Expenses

FIDELITY
Asset Manager 0.72 0.08 0.80
Growth 0.62 0.03 0.69
High Income 0.61 0.10 0.71
Overseas 0.77 0.15 0.92
Money Market 0.20 0.07 0.27
Investment Grade Bond 0.46 0.21 0.67

</TABLE>

Expenses on a hypothetical $1,000 policy, assuming 5% growth:

If you Surrender: 1 Year 3 Years

FIDELITY
Asset Manager 77 107
Growth 76 103
High Income 76 104
Overseas 78 110
Money Market 72 90
Investment Grade Bond 76 103

If you Annuitize: 1 Year 3 Years
FIDELITY
Asset Manager 23 71
Growth 22 67
High Income 22 68
Overseas 24 74
Money Market 18 54
Investment Grade Bond 22 67

If you do not Surrender 1 Year 3 Years
FIDELITY
Asset Manager 23 71
Growth 22 67
High Income 22 68
Overseas 24 74
Money Market 18 54
Investment Grade Bond 22 67

</TABLE>

Annual Fund Expenses After Expense Reimbursements

<TABLE>
<CAPTION>
Total
Management Other Portfolio
Fee Expenses Expenses

VAN ECK
Worldwide Balance 0.00 0.00 0.00
Gold and Natural Resources 0.96 0.00 0.96

</TABLE>

Expenses on a hypothetical $1,000 policy, assuming 5% growth:

If you Surrender: 1 Year 3 Years

VAN ECK
Worldwide Balance 69 82
Gold & Natural Resources 79 111

If you Annuitize: 1 Year 3 Years
VAN ECK
Worldwide Balance 15 46
Gold & Natural Resources 25 75

If you do not Surrender 1 Year 3 Years
VAN ECK
Worldwide Balance 15 46
Gold & Natural Resources 25 75
</TABLE>
</REDLINE>

The purpose of the table set forth above is to assist the
Purchaser in understanding the various costs and expense that a
Owner will bear directly or indirectly. The table reflects
expenses of the Variable Account as well as the Fund. (See
"Charges and Deductions" on page of this Prospectus and
"Management of the Fund" in the Fund Prospectus.)

Any premium or other taxes levied by any governmental entity
with respect to the Contracts will be charged against the
purchase payments or Contract Value based on a percentage of
premiums paid. Premium taxes currently imposed by certain states
on the Contracts range from 0% to 3.5% of premiums paid. (See
"Charges and Deductions - Deduction for Premium and Other Taxes"
on page .)

"Other Expenses" are based upon the expenses outlined under
the section entitled "Management of the Fund" in the Fund
Prospectus.
<REDLINE>
*Fund operating expenses for the Growth and Income
Portfolio, before reimbursement by the Fund's investment adviser,
for the period ending December 31, 1995, were 0.91%. Fund
operating expenses for the following Portfolios, before
reimbursement by the relevant Fund's investment adviser, for the
period ending December 31, 1995, were estimated to be: 20.35% for
the Conservative Investors; 41.62% for the Growth Investors;
04.19% for the Growth; 0.71% for the High Income, 0.69% for the
Growth; 0.27% for the Money Market; 0.92% for the Overseas; 0.80%
for the Asset Manager; 0.67% for the Investment Grade Bond; 0.00%
for the Zero Coupon; 0.40% for the Dreyfus Stock Index; 0.96%
for the Gold and Natural Resources; and 78.40% for the Worldwide
Balanced Portfolios, of the average daily net assets. </REDLINE>

In the event that an Owner withdraws all or a portion of the
Contract Value in excess of the Free Withdrawal Amount for the
first withdrawal in a Contract Year, or makes subsequent
withdrawals in a Contract Year, a Deferred Sales Charge may be
imposed. The Free Withdrawal Amount is equal to 10% of the
Purchase Payments less any prior withdrawals at the time of
withdrawal. (See "Charges and Deductions - Deduction for
Deferred Sales Charge" on page .)

The Example should not be considered a representation of
past or future expenses and actual expenses may be greater or
less than those shown.

CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES*

1994 1993 1992

CONSERVATIVE INVESTORS
Accumulation Unit Value
Beginning of Period 10.00 N/A N/A
End of Period 10.02 N/A N/A
Accum Units o/s 62,868.02 N/A N/A
@ end of period

GROWTH INVESTORS
Accumulation Unit Value
Beginning of Period 10.00 N/A N/A
End of Period 9.81 N/A N/A
Accum Units o/s 29,492.78 N/A N/A
@ end of period

GROWTH
Accumulation Unit Value
Beginning of Period 10.00 N/A N/A
End of Period 10.48 N/A N/A
Accum Units o/s 467,688.06 N/A N/A
@ end of period

GROWTH & INCOME
Accumulation Unit Value
Beginning of Period 11.88 10.78 10.00
End of Period 11.67 11.88 10.78
Accum Units o/s 438,680.32 28,041.82 800.00
@ end of period
</TABLE>

Funds were first invested in the Portfolios as listed below:

<S> <C>

Conservative Investors Portfolio September 8, 1994
Growth Investors Portfolio October 12, 1994
Growth (Alliance) Portfolio August 12, 1994
Growth and Income Portfolio April 17, 1992
<REDLINE>
No financial information has been provided for the Zero Coupon
2000 Portfolio, Dreyfus Stock Index Portfolio, Money Market
Portfolio, Growth (Fidelity) Portfolio, Overseas Portfolio, Asset
Manager Portfolio, Investment Grade Bond Portfolio, High Income
Portfolio, Worldwide Balance Portfolio, or Gold and Natural
Resources Portfolio, because, as of the date of this Prospectus,
the Variable Account had not commenced operations with respect to
such Portfolios.</REDLINE>

</TABLE>

Calculation of Performance Data

The Company may, from time to time, advertise certain
performance related information concerning one or more of the
Sub-accounts, including information as to total return and yield.
Performance information about a Sub-account is based on the
Sub-account's past performance only and is not intended as an
indication of future performance.

When the Company advertises the average annual total return of
a Sub-account, it will usually be calculated for one, five, and
ten year periods or, where a Sub-account has been in existence
for a period less than one, five or ten years, for such lesser
period. Average annual total return is measured by comparing the
value of the investment in a Sub-account at the beginning of the
relevant period to the value of the investment at the end of the
period (assuming the deduction of any Deferred Sales Charge which
would be payable if the account were redeemed at the end of the
period) and calculating the average annual compounded rate of
return necessary to produce the value of the investment at the
end of the period. The Company may simultaneously present
returns that do not assume a surrender and, therefore, do not
deduct the Deferred Sales Charge.

When the Company advertises the yield of a Sub-account it will
be calculated based upon a given 30-day period. The yield is
determined by dividing the net investment income earned per
Accumulation Unit during the period by the value of an
Accumulation Unit on the last day of the period.

When the Company advertises the performance of the Money
Market Sub-account it may advertise in addition to the total
return either the yield or the effective yield. The yield of the
Money Market Sub-account refers to the income generated by an
investment in that Sub-account over a seven-day period. The
income is then annualized (i.e., the amount of income generated
by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of
the investment). The effective yield is calculated similarly but
when annualized the income earned by an investment in the Money
Market Sub-account is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment during a 52-week
period.

Total return at the Variable Account level is reduced by all
contract charges: sales charges, mortality and expense risk
charges, and the administrative charges, and is therefore lower
than the total return at a Fund level, which has no comparable
charges. Likewise, yield and effective yield at the Variable
Account level take into account all recurring charges (except
sales charges), and are therefore lower than the yield and
effective yield at a Fund level, which has no comparable charges.

Performance information for a Sub-account may be compared to:
(i) the Standard & Poor's 500 Stock Index, Dow Jones Industrial
Average, Donoghue Money Market Institutional Averages, indices
measuring corporate bond and government security prices as
prepared by Shearson Lehman Hutton and Salomon Brothers or other
indices measuring performance of a pertinent group of securities
so that investors may compare a Sub-account's results with those
of a group of securities widely regarded by investors as
representative of the securities markets in general; (ii) other
variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services, a widely used independent
research firm which ranks mutual funds and other investment
companies by overall performance, investment objectives, and
assets, or tracked by other ratings services, companies,
publications, or persons who rank separate accounts or other
investment products on overall performance or other criteria;
(iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in the Contract; and
(iv) indices or averages of alternative financial products
available to prospective investors, including the Bank Rate
Monitor which monitors average returns of various bank
instruments.

Financial Data

Financial Statements of the Company may be found in the
Statement of Additional Information.

THE COMPANY

The Company is a stock life insurance company which is
organized under the laws of the State of Delaware. The Company
provides a full range of life insurance and annuity plans. The
Company is a subsidiary of American International Group, Inc.,
which serves as the holding company for a number of companies
engaged in the international insurance business, both life and
general, in over 130 countries and jurisdictions around the
world.

THE VARIABLE ACCOUNT

The Board of Directors of the Company adopted a resolution to
maintain the Variable Account pursuant to Delaware insurance law.
The Company has caused the Variable Account to be registered with
the Securities and Exchange Commission as a unit investment trust
pursuant to the provisions of the Investment Company Act of 1940.

The assets of the Variable Account are the property of the
Company. However, the assets of the Variable Account, equal to
the reserves and other contract liabilities with respect to the
Variable Account, are not chargeable with liabilities arising out
of any other business the Company may conduct. Income, gains and
losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Variable Account
without regard to other income, gains or losses of the Company.
The Company's obligations arising under the Contracts are general
corporate obligations of the Company. The Variable Account may
be subject to liabilities arising from Sub-accounts whose assets
are attributable to other variable annuity contracts offered by
the Variable Account which are not described in this Prospectus.
<REDLINE>
The Variable Account is divided into Sub-accounts, with the
assets of each Sub-account invested in shares of a corresponding
portfolio of the available Funds. The Company may, from time to
time, add additional Portfolios of a Fund, and, when
appropriate, additional Funds to act as the funding vehicles for
the Contracts.

The Funds and The Investment Advisors

Alliance Funds, Fidelity Funds, Dreyfus Funds, and Van Eck
Funds (collectively, the "Funds") are each registered with the
SEC as a diversified open-end management investment company under
the 1940 Act. Each is made up of different series funds or

Portfolios ("Portfolios"). The Dreyfus Stock Index Fund (also a
"Fund" herein) is an open-end, non-diversified management
investment company, intended to be a funding vehicle for separate
accounts of life insurance companies. Shares of the Funds are
sold to separate accounts of life insurance companies and may
also be sold to qualified plans. The investment objectives of
each of the Portfolios in which Subaccounts invest are set forth
below. There is, of course, no assurance that these objectives
will be met. The Fund prospectuses may include series or
Portfolios which are not available under this Contract.
</REDLINE>

ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.

Conservative Investors Portfolio

This Portfolio seeks the highest total return without undue
risk to principal by investing in a diversified mix of publicly
traded equity and fixed-income securities.

Growth Investors Portfolio

This Portfolio seeks the highest total return available with
reasonable risk by investing in a diversified mix of publicly
traded equity and fixed-income securities.

Growth Portfolio

This Portfolio seeks the long term growth of capital by
investing primarily in common stocks and other equity securities.

Growth and Income Portfolio

This Portfolio seeks to balance the objectives of reasonable
current income and opportunities for appreciation through
investments primarily in dividend-paying common stocks of good
quality.

Alliance Variable Products Series Fund, Inc., is managed by
Alliance Capital Management L.P., ("Alliance"). The fund also
includes other portfolios which are not available for use by the
Separate Account. More detailed information regarding management
of the funds, investment objectives, investment advisory fees and
other charges, may be found in the current Alliance Funds
Prospectus which contains a discussion of the risks involved in
investing. The Alliance Funds Prospectus is included with this
Prospectus.

<REDLINE>
DREYFUS VARIABLE INVESTMENT FUND

Zero Coupon 2000 Portfolio

This Portfolio seeks to provide as high an investment return
as is consistent with the preservation of capital. This
portfolio invests primarily in debt obligations of the U.S.
Treasury that have been stripped of their unmatured interest
coupons, interest coupons that have been stripped from debt
obligations issued by the U.S. Treasury, receipts and
certificates for such stripped debt obligations, and stripped
coupons and zero coupon securities issued by domestic
corporations. This portfolio's assets will consist primarily of
portfolio securities which will mature on or about December 31,
2000, at which time the portfolio will be liquidated. Prior to
December 31, 2000, you will be offered the opportunity to
exchange your investment to another Subaccount.

DREYFUS STOCK INDEX FUND

This Fund seeks to provide investment results that correspond
to the price and yield performance of publicly traded common
stocks in the aggregate, as represented by the Standard & Poor's
500 Composite Stock Price Index. In anticipation of taking a
market position, the fund is permitted to purchase and sell stock
index futures. The Fund is neither sponsored by nor affiliated
with Standard & Poor's Corporation.

The Dreyfus Corporation serves as the investment advisor for
the Zero Coupon 2000 Portfolio which is the available portfolio
of the Dreyfus Variable Investment Fund. The fund also includes
other portfolios which are not available under this prospectus as
funding vehicles for the Contract. Wells Fargo Nikko Investment
Advisers ("WFNIA") serves as the index fund manager of the
Dreyfus Stock Index Fund. More detailed information regarding
management of the funds, investment objectives, investment
advisory fees and other charges assessed by the funds, are
contained in the prospectuses of the Dreyfus Variable Investment
Fund and of the Dreyfus Stock Index Fund, each of which is
included with this Prospectus.

FIDELITY INVESTMENT VARIABLE INSURANCE PRODUCTS FUNDS

Growth Portfolio

This Portfolio seeks to aggressively achieve capital
appreciation through investments primarily in common stock.

High Income Portfolio

This Portfolio seeks to obtain a high level of current income
by investing primarily in high-yielding, high-risk, lower-rated,
fixed-income securities (commonly referred to as "junk bonds"),
while also considering the potential for growth of capital. The
potential for high yield is accompanied by a higher risk. For a
more detailed discussion of the investment risks associated with
such securities, please refer to the relevant Fund's attached
prospectus.

Overseas Portfolio

This Portfolio seeks the long-term growth of capital primarily
through investments in securities of companies and economies
outside the United States.

Money Market Portfolio

This Portfolio seeks to obtain as high a level of current
income as is consistent with preserving capital and providing
liquidity. The fund will invest only in high quality U.S.
dollar-denominated money market securities of domestic and
foreign issuers. An investment in Money Market Portfolio is
neither insured nor guaranteed by the U.S. government, and there
can be no assurance that the fund will maintain a stable $1.00
share price.

Asset Manager Portfolio

This Portfolio seeks to provide a high total return with
reduced risk over the long term by allocating its assets among
stocks, bonds and short-term income instruments.

Investment Grade Bond Portfolio

This Portfolio seeks as high a level of current income as is
consistent with the preservation of capital by investing in a
broad range of investment-grade fixed-income securities. The
Portfolio will maintain a dollar-weighted average portfolio
maturity of ten years or less.

Fidelity Management & Research Company ("FMR") is the
investment advisor for the Variable Insurance Products Funds.
FMR has entered into a sub-advisory agreement with FMR Texas,
Inc., on behalf of the Money Market Portfolio. On behalf of the
Overseas Portfolio, FMR has entered into sub-advisory agreements
with Fidelity Management & Research (U.K.) Inc., (FMR U.K.),
Fidelity Management & Research (Far East) Inc. (FMR Far East),
and Fidelity International Investment Advisors (FIIA). FMR U.K.
and FMR Far East also are sub-advisors to the Asset Manager
Portfolio. Fidelity Funds include other portfolios which are not

available under this prospectus as funding vehicles for the
Contracts. More detailed information regarding management of the
funds, investment objectives, investment advisory fees and other
charges assessed by the Fidelity Funds, are contained in the
prospectuses of the funds, included with this Prospectus.

VAN ECK WORLDWIDE INSURANCE TRUST

Worldwide Balanced Fund

This Portfolio seeks long term capital appreciation together
with current income by investing its assets in the United States
and other countries throughout the world, and by allocating its
assets among equity securities, fixed-income securities and
short-term instruments.

Gold and Natural Resources Fund

This Portfolio seeks long-term capital appreciation by
investing in equity and debt securities of companies engaged in
the exploration, development, production and distribution of gold
and other natural resources, such as strategic and other metals,
minerals, forest products, oil, natural gas and coal. Current
income is not an investment objective.

Van Eck Associates Corporation is the investment advisor and
manager of The Van Eck Worldwide Insurance Trust ("Van Eck
Funds"). Van Eck Associates Corporation serves as investment
advisor to the Gold and Natural Resources Fund, and has entered
into sub-advisory agreements to provide investment advice for
certain portfolios. Fiduciary International Inc. ("FII") serves
as a sub-advisor to the Worldwide Balanced Fund. Van Eck Funds
include other portfolios which are not available under this
prospectus as funding vehicles for the Contracts. More detailed
information regarding management of the funds, investment
objectives, investment advisory fees and other charges assessed
by the Van Eck Funds, are contained in the prospectus for the
funds included with this Prospectus.

There is no assurance that the investment of the Portfolios will
be met.

The shares of Alliance Funds, Fidelity Funds, Dreyfus Fund,
the Dreyfus Stock Index Fund, and Van Eck Funds are sold not only
to the Variable Account, but may be sold to other separate
accounts of the Company that fund benefits under variable annuity
and variable life policies. The shares of the Funds are also
sold to separate accounts of other insurance companies. It is
conceivable that in the future it may become disadvantageous for
variable life and variable annuity separate accounts to invest in
the same underlying mutual fund. Although neither we nor

Alliance Funds, Fidelity Funds, Dreyfus Fund, the Dreyfus Stock
Index Fund, and Van Eck Funds currently perceive or anticipate
any such disadvantage, the Funds will monitor events to determine
whether any material conflict exists between variable annuity
Owners and variable life Owners.

Material conflicts could result from such occurrences as: (1)
changes in state insurance laws; (2) changes in federal income
tax law; (3) changes in the investment management of any Fund; or
(4) differences between voting instructions given by variable
annuity Owners and those given by variable life Owners. In the
event of a material irreconcilable conflict, we will take the
steps necessary to protect our variable annuity and variable life
Owners. This could include discontinuance of investment in a
Fund.

Each Fund sells and redeems its shares at Net Asset Value
without any sales charge. Any dividends or distributions from
security transactions of a Fund are reinvested at Net Asset Value
in shares of the same Portfolio; however, there are sales and
additional charges associated with the purchase of the Contracts.

Further information about the Funds and the managers is
contained in the accompanying prospectuses, which You should read
in conjunction with this prospectus. </REDLINE>

Substitution of Securities

If investment in a Subaccount should no longer be possible or,
if in Our judgment, becomes inappropriate to the purposes of the
Contracts, or, if in Our judgment, investment in another
Subaccount or separate account is in the interest of Owners, We
may substitute another Subaccount separate account. No
substitution may take place without notice to Owners and prior
approval of the SEC and insurance regulatory authorities, to the
1940 Act and applicable law.

Voting Rights

The Funds do not hold regular meetings of shareholders. The
Directors of a Fund may call Special Meetings of Shareholders for
action by shareholder vote as may be required by the Investment
Company Act of 1940 or the Articles of Incorporation of a Fund.
In accordance with its view of present applicable law, the
Company will vote the shares of a Fund held in the Variable
Account at special meetings of the shareholders of the Fund in
accordance with instructions received from persons having the
voting interest in the Variable Account. The Company will vote
shares for which it has not received instructions from Owners and
those shares which it owns in the same proportion as it votes
shares for which it has received instructions from Owners.

The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the Company not more
than sixty (60) days prior to the meeting of a Fund. Voting
instructions will be solicited by written communication at least
fourteen (14) days prior to such meeting. The person having such
voting rights will be the Owner before the Annuity Date, and
thereafter, the payee entitled to receive payments under the
Contract. During the Annuity Period, voting rights attributable
to a Contract will generally decrease as the Contract Value
attributable to an Annuitant decreases.

The voting rights relate only to amounts invested in the
Variable Account. There are no voting rights with respect to
funds invested in the General Account.

Allocation Of Purchase Payments to Sub-accounts

Initial purchase payments are allocated to the Sub-account(s)
selected by the Owner in the application except that in those
states which require the Company to deduct premium taxes upon
receipt of a purchase payment the Company will deduct the premium
tax prior to allocating the purchase payment to such
Sub-account(s). The selection must specify a percentage for each
Sub-account that is a whole number, and must be either 0% or a
number equal to or greater than 10%. Subsequent purchase
payments may be made at any time prior to the Annuity Date and
will be allocated to the Sub-accounts selected by the Owner. If
no selection is made, subsequent purchase payments will be
allocated to the Sub-account(s) selected by the Owner according
to the most recent selection request received at the Company's
Office. At the time of the allocation the purchase payment is
divided by the value of the Accumulation Unit for the particular
Sub-account for the Valuation Period during which such allocation
occurs to determine the number of Accumulation Units attributable
to the purchase payment.

The initial purchase payment under an IRA plan will be
allocated to the Money Market Sub-account until the expiration of
twenty (20) days from the day the Contract is mailed from the
Company's office. Thereafter, the Contract Value shall be
reallocated in accordance with instructions specified in the
application. Subsequent purchase payments will be directly
allocated to the Sub-account(s) selected by the Owner according
to the most recent selection request received at the Company's
Office.

Transfer Of Contract Values

Before the Annuity Date, the Owner may transfer, by written
request or telephone authorization, Contract Values from one
Sub-account to another Sub-account, subject to the following
conditions:

(a) the amount transferred from any Sub-account must be at
least $1,000 (or the entire Sub-account value, if
less);
(b) if less than $1,000 would remain in the Sub-account
after the transfer, the Company will transfer the
entire amount in the Sub-account;

(d) The Company will deduct any transfer charge assessed on
the transaction.

The Company is currently not assessing a transfer fee
for the first twelve (12) transfers per Contract Year. The
Company is assessing a transfer fee of $10 per transfer
thereafter. The Company may increase the transfer fee to an
amount not to exceed $30 per transfer. The transfer fee
will be deducted from either the Sub-account which is the
source of the transfer or from the amount transferred if the
entire value in the Sub-account is transferred. (See also
"Appendix - General Account").

Transfer by telephone is authorized by and described in the
application for the Contract. The Company will undertake
reasonable procedures to confirm that instructions communicated
by telephone are genuine. All calls will be recorded. All
transfers performed by telephone authorization will be confirmed
in writing to the Contract Owner. The Company is not liable for
any loss, cost, or expense for action on telephone instructions
which are believed to be genuine in accordance with these
procedures.

After the Annuity Date, the payee of the annuity payments may
transfer the Contract Value allocated to the Variable Account
from one Sub-account to another Sub-account. However, the
Company reserves the right to refuse any more than one transfer
per month. The transfer fee is the same as before the Annuity
Date. This transfer fee will be deducted from the next annuity
payment after the transfer. If following the transfer, the units
remaining in the Sub-account would generate a monthly payment of
less than $100, then the Company may transfer the entire amount
in the Sub-account.

Once the transfer is effected, the Company will recompute the
number of Annuity Units for each Sub-account. The number of
Annuity Units for each Sub-account will remain the same for the
remainder of the payment period unless the payee requests another
change.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Contract Values
and the Variable Account. These charges and deductions are as
follows:

Deduction for Premium and Other Taxes

Any premium or other taxes levied by any governmental entity
with respect to the Contracts will be charged against the
purchase payments or Contract Value . Premium taxes currently
imposed by certain states on the Contracts range from 0% to 3.5%
of premiums paid. Some states assess premium taxes at the time
purchase payments are made; others assess premium taxes at the
time of annuitization. Premium taxes are subject to being changed
or amended by state legislatures, administrative interpretations
or judicial acts.
The Company will also deduct from any amount payable under the
Contracts any income taxes a governmental authority requires the
Company to withhold with respect to that amount.

Deduction for Mortality and Expense Risk Charge

The Company deducts for each Valuation Period a Mortality and
Expense Risk Charge which is equal on an annual basis to 1.25% of
the average daily net asset value of the Variable Account
(consisting of approximately .90% for mortality risks and
approximately .35% for expense risks). The mortality risks
assumed by the Company arise from its contractual obligation to
make annuity payments after the Annuity Date for the life of the
Annuitant, to waive the Deferred Sales Charge in the event of the
death of the Annuitant and to provide the death benefit prior to
the Annuity Date. The expense risk assumed by the Company is
that the costs of administering the Contracts and the Variable
Account will exceed the amount received from any Administrative
Charge.

If the Mortality and Expense Risk Charge is insufficient to
cover the actual costs, the loss will be borne by the Company.
Conversely, if the amount deducted proves more than sufficient,
the excess will be profit to the Company.

The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.

The Mortality and Expense Risk Charge is deducted during the
Accumulation Period and after the Annuity Date.

The Company currently offers annuity payment options that are
based on a life contingency. (See "Annuity Period - Annuity
Options" on page .) It is possible that in the future
the Company may offer additional payment options which are not

based on a life contingency. If this should occur and if a Owner
should elect a payment option not based on a life contingency,
the Mortality and Expense Risk Charge is still deducted but the
Owner receives no benefit from it.

Deduction for Deferred Sales Charge

In the event that an Owner makes a withdrawal in excess of
the Free Withdrawal Amount for the first withdrawal in a Contract
Year, or makes subsequent withdrawals in a Contract Year, other
than by way of the Systematic Withdrawal Program (See
"Withdrawals-Systematic Withdrawal Program" on page _____), a
Deferred Sales Charge may be imposed. The Free Withdrawal Amount
is equal to 10% of the purchase payments paid, less any prior
withdrawals at the time of withdrawal. (See, however,
"Purchasing a Contract - Discount Purchase Programs" on page
____.)

The Deferred Sales Charge will vary in amount depending upon
the time which has elapsed since the date on which the purchase
payment was made. The Deferred Sales Charge applies only to
those purchase payments received within six (6) years of the date
of surrender. In calculating the Deferred Sales Charge purchase
payments are allocated to the amount surrendered on a first-in,
first out basis. The amount of any withdrawal which exceeds the
Free Withdrawal Amount will be subject to the following charge:

<TABLE>
<CAPTION>
Applicable Deferred
Contract Year Sales Charge Percentage

<S> <C>

1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 and thereafter 0%

</TABLE>

The aggregate Deferred Sales Charges paid with respect to a
Contract shall not exceed 8.5% of the purchase payments for such
Contract.

The Deferred Sales Charge is intended to reimburse the Company
for expenses incurred which are related to Contract sales. The
Company does not expect the proceeds from the Deferred Sales
Charge to cover all distribution costs. To the extent such

charge is insufficient to cover all distribution costs, the
Company may use any of its corporate assets, including potential
profit which may arise from the Mortality and Expense Risk
Charge, to make up any difference.

Certain restrictions on surrenders are imposed on Contracts
issued in connection with retirement plans which qualify under
Code Section 403(b) (a "403(b) Plan"). (See "Taxes - 403(b)
Plans" on page .)

Deduction for Administrative Charge

The Company deducts for each Valuation Period a daily
Administrative Charge which is equal on an annual basis to .15%
of the average daily net asset value of the Variable Account.
The Company also deducts an annual Administrative Charge which is
currently $30 per year, from the Contract Value. The Company may
increase the annual Administrative Charge to an amount not to
exceed $100 per year. The Administrative Charges are designed to
reimburse the Company for the costs it incurs relating to
maintenance of the Contract and the Variable Account.

The daily Administrative Charge is deducted during the
Accumulation Period and after the Annuity Date.

Prior to the Annuity Date, the annual Administrative Charge is
deducted from the Contract Value on each Contract Anniversary.
If the Annuity Date is a date other than a Contract Anniversary,
the Company will also deduct a pro-rata portion of the annual
Administrative Charge from the Contract Value for the fraction of
the Contract Year preceding the Annuity Date.

The annual Administrative Charge is also deducted in full on
the date of any total withdrawal. The annual Administrative
Charge will be deducted from each Sub-account of the Variable
Account in the proportion that the value of each Sub-account
attributable to the Contract bears to the total Contract Value.

After the Annuity Date, the annual Administrative Charge is
deducted on a pro-rata basis from each annuity payment and is
guaranteed to remain at the same amount as at the Annuity Date.

Deduction for Income Taxes

The Company deducts from the Contract Value and/or the
Variable Account any Federal income taxes resulting from the
operation of the Variable Account. The Company does not
currently anticipate incurring any income taxes.

Other Expenses

There are deductions from and expenses paid out of the assets
of the Fund which are described in the accompanying Prospectuses
for the Funds.

<REDLINE> ADMINISTRATION OF THE CONTRACTS

While the Company has primary responsibility for all
administration of the Contracts and the Variable Account, it has
retained the services of Delaware Valley Financial Services, Inc.
("DVFS") pursuant to an administrative agreement. Such
administrative services include issuance of the Contracts and
maintenance of Contract Owners' records. DVFS serves as the
administrator to various insurance companies offering variable
contracts. </REDLINE>

RIGHTS UNDER THE CONTRACTS

The Owner has all rights and may receive all benefits under
the Contract. The Owner is named in the application. Ownership
may be changed prior to the Annuity Date through the submission
of written notification of the change to the Company on a form
acceptable to the Company. On and after the Annuity Date, the
Annuitant and Owner shall be one in the same person , unless
otherwise provided for. In the case of Contracts issued in
connection with an IRA, the Owner must be the Annuitant.

The Owner's spouse is the only person eligible to be the
Contingent Owner. (See "Death Benefit - Death of the Owner" on
page .) Any new choice of Annuitant or Contingent Owner will
automatically revoke any prior choices.

The Owner may, except in the case of a Contract issued in
connection with either an IRA or a 403(b) Plan, assign a Contract
at any time before the Annuity Date and while the Annuitant is
alive. A copy of any assignment must be filed with the Company.
The Company is not responsible for the validity of any
assignment. If the Contract is assigned, the rights of the Owner
and those of any revocable Beneficiary will be subject to the
assignment. An assignment will not affect any payments the
Company may make or action it may take before it is recorded.
Inasmuch as an assignment or change of ownership may be a taxable
event, Owners should consult competent tax advisers should they
wish to assign their Contracts.

The Contract may be modified only with the consent of the
Owner, except as may be required by applicable law.

ANNUITY PERIOD

Annuity Benefits

If the Annuitant and Owner are alive on the Annuity Date, the
Company will begin making payments to the Annuitant under the
annuity option or options the Owner has chosen.

The Owner may choose or change an annuity payment option by
making a written request at least thirty (30) days prior to the
Annuity Date.

The amount of the payments will be determined by applying the
Contract Value on the Annuity Date. The amount of the annuity
payments will depend on the age of the payee at the time the
settlement contract is issued. At the Annuity Date the Contract
Value in each Sub-account will be applied to the applicable
annuity tables contained in the Contract. The amount of the
Sub-account annuity payments are determined through a calculation
described in the Section captioned "Annuity Provisions" in the
Statement of Additional Information.

Annuity Date

The Annuity Date for the Annuitant is:

(a) the first day of the calendar month following the later
of the Annuitant's 85th birthday or the 10th Contract
Anniversary; or

(b) such earlier date as may be set by applicable law.

The Owner may designate an earlier date in the application or
may change the Annuity Date by making a written request at least
thirty (30) days prior to the Annuity Date being changed.
However, any Annuity Date must be:

(a) no later than the date defined in (a) above; and

(b) the first day of a calendar month.

Annuity Options

The Owner may choose to receive annuity payments which are
fixed, or which are based on the Variable Account, or a
combination of the two. If the Owner elects annuity payments
which are based on the Variable Account, the amount of the
payments will be variable. The Owner may not transfer Contract
Values between the General Account and the Variable Account after
the Annuity Date, but may, subject to certain conditions,
transfer Contract Values from one Sub-account to another

Sub-account. (See "The Variable Account - Transfer of Contract
Values" on page .)

If the Owner has not made any annuity payment option selection
at the Annuity Date, the Contract Value will be applied to
purchase Option 2 fixed basis annuity payments and Option 2
variable basis annuity payments, in proportion to the amount of
Contract Value in the General Account and the Variable Account,
respectively.

The annuity payment options are:

Option 1: Life Income. The Company will pay an annuity
during the lifetime of the payee.

Option 2: Life Income with 10 Years of Payments Guaranteed.
The Company will pay an annuity during the lifetime of the payee.
If, at the death of the payee, payments have been made for less
than 10 years:

(a) payments will be continued during the remainder of the
period to the successor payee;

(b) the successor payee may elect to receive in a lump sum
the present value of the remaining payments, commuted
at the interest rate used to create the annuity factor
for this Option; or

(c) the guaranteed period will not in the case of Contracts
issued in connection with an IRA exceed the life
expectancy of the Annuitant at the time the first
payment is due.

Option 3: Joint and Last Survivor Income. The Company will
pay an annuity for as long as either the payee or a designated
second person is alive. In the event that the Contract is issued
in connection with an IRA, the payments in this Option will be
made only to the Annuitant and the Annuitant's spouse.

The annuity payment options are more fully explained in the
Statement of Additional Information. The Company may also offer
additional options at its own discretion.

Annuity Payments

If the Contract Value applied to annuity payment options is
less than $2,000, the Company has the right to pay the amount in
a lump sum in lieu of annuity payments. The Company makes all
other annuity payments monthly. However, if the total monthly
annuity payment would be less than $100 the Company has the right
to make payments semi-annually or annually.

If fixed annuity payments are selected, the amount of each
fixed payment is determined by multiplying the Contract Value
allocated to purchase fixed annuity payments by the factor shown
in the annuity table specified in the Contract for the option
selected, divided by 1,000.

If variable annuity payments are selected, the Annuitant
receives the value of a fixed number of Annuity Units each month.
The actual dollar amount of variable annuity payments is
dependent upon: (i) the Contract Value at the time of
annuitization; (ii) the annuity table specified in the Contract;
(iii) the Annuity Option selected; (iv) the investment
performance of the Sub-account selected; and (v) the pro-rata
portion of the annual Administrative charge.

The annuity tables contained in the Contract are based on a 5%
assumed investment rate. If the actual net investment rate
exceeds 5%, payments will increase. Conversely, if the actual
rate is less than 5%, annuity payments will decrease.

DEATH BENEFIT
Death Benefit

If the Annuitant (or Owner, if applicable) dies before the
Annuity Date, the Company will pay a death benefit equal to the
greater of: (a) the purchase payments paid less withdrawals; (b)
the Contract Value; or, (c) the greatest Contract Value at any
sixth contract anniversary increment (i.e., sixth, twelfth,
eighteenth, etc.) plus any additional purchase payment paid less
any subsequent withdrawals.

Before the Company will pay any death benefit, the Company
will require due proof of death. The Company will determine the
value of the death benefit as of the Valuation Period following
receipt of due proof of death at the Company's Office. The
Company will pay the death benefit to the Beneficiary in
accordance with any applicable laws governing the payment of
death proceeds.

Payment of the death benefit may be made in one lump sum or
applied under one of the annuity payment options. (See "Annuity
Period - Annuity Options" on page .) The Owner may by written
request elect that any death benefit of at least $2,000 be
received by the Beneficiary under an annuity payment option. (See
"Annuity Period - Annuity Options" on page .) If no payment
option had been selected by the Owner, the Beneficiary has sixty
(60) days in which to make a written request to elect either a
lump sum payment or any annuity payment option. Any lump sum
payment will be made within seven (7) days after the Company has
received due proof of death and the written election of the
Beneficiary, unless a delay of payments provision is in effect.

(See Statement of Additional Information - "General Information -
Delay of Payments.")

Death of the Owner

If an Owner dies before the Annuity Date, the entire Contract
Value must be distributed within five (5) years of the date of
death, unless:

(a) it is payable over the lifetime of a designated
Beneficiary with distributions beginning within one (1)
year of the date of death; or

(b) the Contingent Owner, if any, continues the Contract in
his or her own name.

In the case of Contracts issued in connection with an IRA
plan, the Beneficiary or Contingent Owner may elect to accelerate
these payments. Any method of acceleration chosen must be
approved by the Company.

If the Owner dies after the Annuity Date, distribution will be
as provided in the annuity payment option selected.

PURCHASING A CONTRACT

Application

In order to acquire a Contract, an application provided by the
Company must be completed and submitted to the Company's Office
for acceptance. The Company must also receive the initial
purchase payment. Upon acceptance, the Contract is issued to the
Owner and the purchase payment is then credited to the Variable
Account and converted into Accumulation Units, except in those
states where the applicable premium tax is deducted from the
purchase payment. (See Allocation of Purchase Payment to
Sub-accounts" on page .) If the application for a Contract is
in good order, the Company will apply the purchase payment to the
Variable Account and credit the Contract with Accumulation Units
within two (2) business days of receipt. In addition to the
underwriting requirements of the Company, good order means that
the Company has received federal funds (monies credited to a
bank's account with its regional Federal Reserve Bank). If the
application for a Contract is not in good order, the Company will
attempt to get it in good order within five (5) business days or
the Company will return the application and the purchase payment,
unless the prospective owner specifically consents to the
Company's retaining them until the application is made complete.

Purchase Payments

The minimum initial purchase payment is $5,000 for
Non-Qualified Contracts and $2,000 for a Contract purchased in
connection with an IRA or 403(b) Plan.

Owners may make additional purchase payments prior to the
Annuity Date. The minimum additional purchase payment the
Company will accept is $1,000. The Company reserves the right to
refuse to accept any additional purchase payments.

Discount Purchase Programs

Purchases made by officers, directors and employees of either
the Company, an affiliate of the Company or any individual, firm
or company that has executed the necessary agreements to sell the
Contracts and members of each of their immediate families will
not be subject to the Deferred Sales Charge. (See "Charges and
Deductions - Deduction for Deferred Sales Charge" on page _____.)
Such purchases include retirement accounts and must be for
accounts in the name of the individual or qualifying family
member.

Distributor

AIG Equity Sales Corp. ("AESC"), formerly known as American
International Fund Distributors, Inc., 80 Pine Street, New York,
New York, acts as the distributor of the Contracts. AESC is a
wholly-owned subsidiary of American International Group, Inc. and
an affiliate of the Company.

Commissions will be paid to registered representatives of AESC
and other entities which sell the Contracts. Additional payments
may be made for other services not directly related to the sale
of the Contracts, including the recruitment and training of
personnel, production of promotional literature, and similar
services.

Under the Glass-Steagall Act and other laws, certain banking
institutions may be prohibited from distributing variable annuity
contracts. If a bank were prohibited from performing certain
agency or administrative services and receiving fees from AESC,
Owners who purchased Contracts through the bank would be
permitted to retain their Contracts and alternate means for
servicing those Owners would be sought. It is not expected,
however, that Owners would suffer any loss of services or adverse
financial consequences as a result of any of these occurrences.

CONTRACT VALUE

The Contract Value is the sum of the value of all Sub-account
Accumulation Units attributable to the Contract and amounts
contributed to a guarantee period of the General Account. (See
"Appendix-General Account Option"). The value of an Accumulation
Unit will vary from Valuation Period to Valuation Period. The
value of an Accumulation Unit is determined at the end of the
Valuation Period and reflects the investment earnings, or loss,
and the deductions for the Valuation Period.

WITHDRAWALS
Partial Withdrawal

The Owner may partially withdraw Contract Values from the
Contract prior to the Annuity Date. Any partial withdrawal is
subject to the following conditions:

(a) the Company must receive a written request;

(b) the amount requested must be at least $500;

(d) the amount withdrawn will be the sum of the amount
requested and the amount of any applicable Deferred
Sales Charge; and

(e) the Company will deduct the amount requested plus any
Deferred Sales Charge from each Sub-account of the
Variable Account either as specified or in the
proportion that the Sub-account bears to the total
Contract Value.

Systematic Withdrawal Program

During the Accumulation Period an Owner may at any time elect
in writing to take systematic withdrawals from one or more of the
Sub-accounts or from a guarantee period of the General Account
(See "Appendix-General Account Option") for a period of time not
to exceed 12 months. In order to initiate this program, the
amount to be systematically withdrawn must be equal to or greater
than $200 provided that the Contract Value is equal to or greater
than $24,000 and the amount to be withdrawn does not exceed the
Free Withdrawal Amount. Systematic withdrawals will be made
without the imposition of the Deferred Sales Charge. Systematic
withdrawals may occur monthly or quarterly.

The systematic withdrawal program may be canceled at any time
by written request or automatically should the Contract Value
fall below $1,000. In the event the systematic withdrawal

program is canceled, the Owner may not elect to participate in
such program until the next Contract Anniversary.

An Owner may change once per Contract Year the amount or
frequency subject to be withdrawn on a systematic basis.

The systematic withdrawal program is annually renewable,
although the limitations set forth above shall continue to apply.

The Free Withdrawal Amount (see "Charges and Deductions -
Deduction for Deferred Sales Charge" on page ) and Dollar Cost
Averaging (See Statement of Additional Information-"General
Information- Transfers") are not available while a Owner is
receiving systematic withdrawals. A Owner will be entitled to
the Free Withdrawal Amount and Dollar Cost Averaging on and after
the Contract Anniversary next following the termination of the
systematic withdrawal program.

Implementation of the systematic withdrawal program may
subject a Owner to adverse tax consequences, including a 10% tax
penalty tax. (See "Taxes - Taxation of Annuities in General" on
page for a discussion of the tax consequences of
withdrawals.)

Total Withdrawal

The Owner may withdraw the entire Contract Value prior to the
Annuity Date. A total withdrawal will cancel the Contract. The
total withdrawal value is equal to the Contract Value next
calculated after receipt of the written withdrawal request, less
any applicable Deferred Sales Charge, less the annual
Administrative Charge and less any applicable premium taxes, and,
less any applicable charges assessed to amounts in the General
Account. (See "Charges and Deductions" on page and
"Appendix-General Account Option".)

Payment of Withdrawals

Any Contract Values withdrawn will be sent to the Owner within
seven (7) days of receipt of the written request, unless the
Delay of Payments provision is in effect. (See Statement of
Additional Information - "General Information - Delay of
Payments.") (See "Taxes - Taxation of Annuities in General" on
page for a discussion of the tax consequences of
withdrawals.)

The Company reserves the right to ensure that a Owner's check
or other form of purchase payment has been cleared for payment
prior to processing any withdrawal or redemption request
occurring shortly after a purchase payment.

Certain restrictions on withdrawals are imposed on Contracts
issued in connection with 403(b) Plans. (See "Taxes - 403(b)
Plans" on page .)

TAXES
Introduction

The Contracts are designed to accumulate Contract Values with
retirement plans which, except for IRAs and 403(b) Plans, are
generally not tax-qualified plans ("Qualified Plans"). The
ultimate effect of Federal income taxes on the amounts held under
a Contract, on annuity payments, and on the economic benefits to
the Owner, Annuitant or Beneficiary depend on the Company's tax
status and upon the tax and employment status of the individual
concerned. Accordingly, each potential Owner should consult a
competent tax adviser regarding the tax consequences of
purchasing a Contract.

The following discussion is general in nature and is not
intended as tax advice. No attempt is made to consider any
applicable state or other tax laws. Moreover, the discussion is
based upon the Company's understanding of the Federal income tax
laws as they are currently interpreted. No representation is
made regarding the likelihood of continuation of the Federal
income tax laws, the Treasury Regulations, or the current
interpretations by the Internal Revenue Service (the "Service").
For a discussion of Federal income taxes as they relate to the
Fund, please see the accompanying Prospectus for the Fund.

Company Tax Status

The Company is taxed as a life insurance company under Part I
of Subchapter L of the Internal Revenue Code of 1986, as amended
(the "Code"). Since the Variable Account is not a separate
entity from the Company and its operations form a part of the
Company, it will not be taxed separately as a "regulated
investment company" under Subchapter M of the Code. Investment
income and realized capital gains on the assets of the Variable
Account are reinvested and taken into account in determining the
Contract Value. Under existing Federal income tax law, the
Variable Account's investment income, including realized net
capital gains, is not taxed to the Company. The Company reserves
the right to make a deduction for taxes from the assets of the
Variable Account should they be imposed with respect to such
items in the future.

Taxation of Annuities in General - Non-Qualified Plans

Code Section 72 governs the taxation of annuities. In
general, a Owner is not taxed on increases in value under a
Contract until some form of withdrawal or distribution is made

under the Contract. However, under certain circumstances, the
increase in value may be subject to tax currently. (See "Taxes -
Contracts Owned by Non-Natural Persons," on page and "Taxes
- Diversification Standards" on page____.)

Withdrawals prior to the Annuity Date

Code Section 72 provides that a total or partial withdrawal
from a Contract prior to the Annuity Date will be treated as
taxable income to the extent the amounts held under the
Contract exceed the "investment in the contract," as that term
is defined under the Code. The "investment in the contract"
can generally be described as the cost of the Contract. It
generally constitutes the sum of all purchase payments made
for the contract less any amounts received under the Contract
that are excluded from gross income. The taxable portion is
taxed as ordinary income. For purposes of this rule, a pledge
or assignment of a Contract is treated as a payment received
on account of a partial withdrawal of a Contract.

Withdrawals on or after the Annuity Date

Upon receipt of a lump sum payment or an annuity payment
under the Contract, the recipient is taxed on the portion of
the payment that exceeds the investment in the Contract.
Ordinarily, the taxable portion of payments under the Contract
will be taxed as ordinary income.

For fixed annuity payments, the taxable portion of each
payment is generally determined by using a formula known as
the "exclusion ratio", which establishes the ratio that the
investment in the Contract bears to the total expected amount
of annuity payments for the term of the Contract. That ratio
is then applied to each payment to determine the nontaxable
portion of the payment. The remaining portion of each payment
is taxed as ordinary income. For variable annuity payments,
the taxable portion is determined by a formula which
establishes a specific dollar amount of each payment that is
not taxed. The dollar amount is determined by dividing the
investment in the Contract by the total number of expected
periodic payments. The remaining portion of each payment is
taxed as ordinary income.

The Company is obligated to withhold Federal income taxes
from certain payments unless the recipient elects otherwise.
Prior to the first payment, the Company will notify the payee
of the right to elect out of withholding and will furnish a
form on which the election may be made. The payee must
properly notify the Company of that election in advance of the
payment in order to avoid withholding.

Penalty Tax on Certain Withdrawals

With respect to amounts withdrawn or distributed before the
taxpayer reaches age 59 1/2, a 10% penalty tax is imposed upon
the portion of such amount which is includable in gross
income. However, the penalty tax will not apply to
withdrawals: (i) made on or after the death of the Owner (or
where the Owner is not an individual, the death of the
"primary annuitant", who is defined as the individual, the
events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the
Contract); (ii) attributable to the taxpayer's becoming
totally disabled within the meaning of Code Section 72(m)(7);
(iii) which are part of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the taxpayer, or the joint
lives (or joint life expectancies) of the taxpayer and his
beneficiary; (iv) allocable to investment in the Contract
before August 14, 1982; (v) under a qualified funding asset
(as defined in Code Section 130(d)); (vi) under an immediate
annuity contract; or (vii) that are purchased by an employer
on termination of certain types of qualified plans and which
are held by the employer until the employee separates from
service.

If the penalty tax does not apply to a withdrawal as a
result of the application of item (iii) above, and the series
of payments are subsequently modified (other than by reason of
death or disability), the tax for the first year in which the
modification occurs will be increased by an amount equal to
the tax that would have been imposed but for item (iii) above
as determined under Treasury Regulations, plus interest for
the deferral period. The foregoing rule applies if the
modification takes place: (a) before the close of the period
which is five years from the date of the first payment and
after the taxpayer attains age 59 1/2; or (b) before the
taxpayer reaches age 59 1/2.

Assignments

Any assignment or pledge of the Contract as collateral for a
loan may result in a taxable event and the excess of the
Contract Value over purchase payments will be taxed to the
assignor as ordinary income. Please consult your tax adviser
prior to making an assignment of the Contract.

Distribution-at-Death Rules

In order to be treated as an annuity contract for Federal
income tax purposes, a Contract must generally provide for the
following two distribution rules: (i) if the Owner dies on or
after the Annuity Date, and before the entire interest in the

Contract has been distributed, the remaining portion of such
interest will be distributed at least as quickly as the method
in effect on the Owner's death; and (ii) if a Owner dies
before the Annuity Date, the entire interest must generally be
distributed within five years after the date of death. To the
extent such interest is payable to a designated Beneficiary,
however, such interest may be annuitized over the life of that
Beneficiary or over a period not extending beyond the life
expectancy of that Beneficiary, so long as distributions
commence within one year after the date of death. If the
Beneficiary is the spouse of the Owner, the Contract may be
continued unchanged in the name of the spouse as Owner.

If the Owner is not an individual, the "primary annuitant"
(as defined under the Code) is considered the Owner. In
addition, when the Owner is not an individual, a change in the
primary annuitant is treated as the death of the Owner.

Gifts of Contracts

Any transfer of a Contract prior to the Annuity Date for
less than full and adequate consideration will generally
trigger tax on the gain in the Contract. The transferee will
receive a step-up in basis for the amount included in the
transferor's income. This provision, however, does not apply
to those transfers between spouses or incident to a divorce
which are governed by Code Section 1041(a).

Contracts Owned by Non-Natural Persons

If the Contract is held by a non-natural person (for
example, a corporation or trust) the Contract is generally not
treated as an annuity contract for Federal income tax
purposes, and the income on the Contract (generally the excess
of the Contract Value over the purchase payments) is
includable in income each year. The rule does not apply where
the non-natural person is only the nominal owner such as a
trust or other entity acting as an agent for a natural person.
The rule also does not apply when the Contract is acquired by
the estate of a decedent, when the Contract is held under
certain qualified plans, when the Contract is a qualified
funding asset for structured settlements, when the Contract is
purchased on behalf of an employee upon termination of a
qualified plan, and in the case of an immediate annuity.

Section 1035 Exchanges

Code Section 1035 provides that no gain or loss shall be
recognized on the exchange of an annuity contract for another
annuity contract. A replacement contract obtained in a
tax-free exchange of contracts succeeds to the status of the
surrendered contract. Special rules and procedures apply to

Code Section 1035 transactions. Prospective owners wishing to
take advantage of Code Section 1035 should consult their tax
advisers.

Multiple Contracts

Annuity contracts that are issued by the same company (or
affiliate) to the same Owner during any calendar year will be
treated as one annuity contract in determining the amount
includable in the taxpayer's gross income. Thus, any amount
received under any such contract prior to the contract's
annuity starting date will be taxable (and possibly subject to
the 10% penalty tax) to the extent of the combined income in
all such contracts. The Treasury has broad regulatory
authority to prevent avoidance of the purposes of this
aggregation rule. It is possible that, under this authority,
Treasury may apply this rule to amounts that are paid as
annuities (on or after the starting date) under annuity
contracts issued by the same company to the same Owner during
any calendar year period. In this case, annuity payments
could be fully taxable (and possibly subject to the 10%
penalty tax) to the extent of the combined income in all such
contracts and regardless of whether any amount would otherwise
have been excluded from income. Owners should consult a tax
adviser before purchasing more than one Contract or other
annuity contracts.

Diversification Standards

To comply with the diversification regulations promulgated
under Code Section 817(h) (the "Diversification Regulations"),
after a start-up period, each Sub-account is required to
diversify its investments. The Diversification Regulations
generally require that on the last day of each quarter of a
calendar year no more than 55% of the value of the assets of a
Sub-account is represented by any one investment, no more than
70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is
represented by any four investments. A "look-through" rule
applies so that an investment in the Fund is not treated as one
investment but is treated as an investment in a pro-rata portion
of each underlying asset of the Fund. All securities of the same
issuer are treated as a single investment. In the case of
government securities, each Government agency or instrumentality
is treated as a separate issuer.

In connection with the issuance of the proposed and temporary
version of the Diversification Regulations, Treasury announced
that such regulations do not provide guidance concerning the
extent to which Owners may direct their investments to particular
divisions of a separate account. It is possible that if and when
additional regulations or IRS pronouncements are issued, the

Contract may need to be modified to comply with such rules. For
these reasons, the Company reserves the right to modify the
Contract, as necessary, to prevent the Owner from being
considered the owner of the assets of the Variable Account.

The Company intends to comply with the Diversification
Regulations to assure that the Contracts continue to be treated
as annuity contracts for Federal income tax purposes.

Qualified Plans

The Contracts may be used to create an IRA. The Contracts are
also available for use in connection with a previously
established 403(b) Plan. No attempt is made herein to provide
more than general information about the use of the Contracts with
IRAs or 403(b) Plans. The information herein is not intended as
tax advice. A prospective Owner considering use of the Contract
to create an IRA or in connection with a 403(b) Plan should first
consult a competent tax adviser with regard to the suitability of
the Contract as an investment vehicle for their qualified plan.

While the Contract will not be available in connection with
retirement plans designed by the Company which qualify for the
federal tax advantages available under Sections 401 and 457 of
the Code, a Contract can be used as the investment medium for an
individual Owner's separately qualified retirement plan. Under
amendments to the Internal Revenue Code which became effective in
1993, distributions for a qualified plan (other than non-taxable
distributions representing a return of capital, distributions
meeting the minimum distribution requirement, distributions for
the life or life expectancy of the recipient(s) or distributions
that are made over a period of more than 10 years) are eligible
for tax-free rollover within 60 days of the date of distribution,
but are also subject to federal income tax withholding at a 20%
rate unless paid directly to another qualified plan. If the
recipient is unable to take full advantage of the tax-free
rollover provisions, there may be taxable income, and the
imposition of a 10% penalty if the recipient is under age 59 1/2.
A prospective Owner considering use of the Contract in this
manner should consult a competent tax adviser with regard to the
suitability of the Contract for this purpose and for information
concerning the provisions of the Code applicable to qualified
plans.

Individual Retirement Annuities

Section 408 of the Code permits eligible individuals to
contribute to an IRA. Contracts issued in connection with an IRA
are subject to limitations on eligibility, maximum contributions,
and time of distribution. Distributions from certain retirement
plans qualifying for federal tax advantages may be rolled over
into an IRA. Sales of the Contracts for use with IRAs are

subject to special requirements imposed by the Service, including
the requirement that informational disclosure be given to each
person desiring to establish an IRA. The IRAs offered by this
Prospectus are not available in all states.

403(b) Plans

Code Section 403(b)(11) imposes certain restrictions on a
Owner's ability to make partial withdrawals from Code Section
403(b) Contracts, if attributable to purchase payments made under
a salary reduction agreement. Specifically, Code Section
403(b)(11) allows a Owner to make a surrender or partial
withdrawal only (a) when the employee attains age 59 1/2,
separates from service, dies, or becomes disabled (as defined in
the Code), or (b) in the case of hardship. In the case of
hardship, only an amount equal to the purchase payments may be
withdrawn. In addition, under Code Section 403(b) the employer
must comply with certain non-discrimination requirements. Owners
should consult their employers to determine whether the employer
has complied with these rules. The 403(b) Plan offered by this
Prospectus is not available in all states.

APPENDIX

GENERAL ACCOUNT OPTION

Under the General Account option, Contract Values are held in
the Company's General Account. Because of exemptive and
exclusionary provisions, interests in the General Account have
not been registered under the Securities Act of 1933 nor is the
General Account registered as an investment company under the
Investment Company Act of 1940. The Company understands that the
staff of the Securities and Exchange Commission has not reviewed
the disclosures in this Prospectus relating to the General
Account portion of the Contract. Disclosures regarding the
General Account may, however, be subject to certain generally
applicable provisions of the federal securities laws relating to
the accuracy and completeness of statements made in prospectuses.
The General Account option is not available in all states.

During the Accumulation Period the Owner may allocate amounts
to the General Account. The General Account is an account
maintained by us into which all of our assets have been allocated
other than the assets of the Variable Account and any other
separate accounts we maintain. The initial Purchase Payment will
be invested in the General Account in accordance with the
selection made by the Owner in the application. Additional
Purchase Payments will be allocated to General Account in
accordance with the selection made by the Owner in the
application or the most recent selection received at the Company
Office, unless otherwise specified by the Owner. If the Owner

elects to withdrawal amounts from the General Account such
withdrawal, except as otherwise provided in this Appendix, will
be subject to the same conditions as imposed on withdrawals from
the Variable Account. The Company reserves the right to delay
any payment from the General Account for up to six (6) months
from the date it receives such request at its Office.

INVESTMENTS IN THE GENERAL ACCOUNT

An allocation of the initial Purchase Payment to a guarantee
period must equal the greater of (a) or (b) where: (a) is a
percentage that is a whole number, equal to or greater than 10%
and (b) is a dollar amount which is equal to or greater than
$3,000. Subsequent Purchase Payments allocated to a guarantee
period must be equal to or greater than $3,000. Amounts invested
in the General Account are credited with interest on a daily
basis at the then applicable effective guarantee rate. The
effective guarantee rate is that rate in effect when the Owner
allocates or transfers amounts to the General Account. If the
Owner has allocated or transferred amounts at different times to
the General Account, each allocation or transfer may have a
unique effect guarantee rate and guarantee period associated with
that amount. We guarantee that the effective guarantee rate will
not be changed more than once per year and will not be less than
3%.

GENERAL ACCOUNT TRANSFERS

During the Accumulation Period the Owner may transfer, by
written request or telephone authorization, Contract Values to or
from a sub-account of the Variable Account to or from a guarantee
period of the General Account at any time, subject to the
conditions set out under Transfer of Contract Values Section.

Prior to the end of a guarantee period the Owner may specify
the sub-account(s) of the Variable Account or the applicable
guarantee period of the General Account to which the Owner wants
the amounts from the General Account transferred at the end of
the guarantee period. If the Owner does not notify us prior to
the end of the guarantee period, we will apply that amount to a
new guarantee period in the General Account, which is then
subject to the same conditions as the original guarantee period,
including the condition that the amount cannot be transferred out
of the General Account until the end of that guarantee period.
The effective guarantee rate applicable to the new guarantee
period may be different from the effective guarantee rate
applicable to the original guarantee period. These transfers
will be handled at no charge to the Owner.

MARKET VALUE ADJUSTMENT

A transfer, withdrawal, payment of a death benefit, or
annuitization of amounts allocated to the General Account may be
subject to a Market Value Adjustment which will be applied to the
amount transferred, withdrawn, paid or annuitized. The Market
Value Adjustment is made by multiplying the amount to be
transferred, withdrawn, paid or annuitized by the following
formula:

1 + .75 x (A-B) x [N/12], where:

A = The Guaranteed Interest Rate applicable to the
guarantee period of that portion of proceeds being
transferred, withdrawn, paid or annuitized.

B = The Guaranteed Interest Rate currently available for
the same length of guarantee period as that remaining
in the period applicable to that portion of proceeds
being transferred, withdrawn, paid or annuitized. If
no such guarantee period exists, the Guaranteed
Interest Rate will be calculated by straight line
interpolation of the Guaranteed Interest Rates of
available guarantee periods.

N = The number of complete and partial months remaining to
the end of the guarantee period applicable to that
portion of proceeds being transferred, withdrawn, paid
or annuitized.

GUARANTEE PERIODS

The period(s) for which a guaranteed interest rate is credited
is called the Guarantee Period. Guarantee Periods may be offered
or withdrawn at the Company's discretion. The initial Guarantee
Period(s) and the applicable guaranteed interest rate(s)
applicable to the initial Purchase Payment is as shown on the
application, unless such purchase payment is made under an IRA
plan. At the expiration of any Guarantee Period applicable to
all or a portion of the Contract Value, that portion of the
Contract Value will be automatically renewed for another
Guarantee Period for the same duration as the expired guarantee
period and will receive the guaranteed interest rate then in
effect for that Guarantee Period. All requests to change a
Guarantee Period must be received in writing at the Company's
Office no earlier than 30 days prior to the end of the Guarantee
Period from which the transfer will be made.

MINIMUM SURRENDER VALUE

The Minimum Surrender Value for amounts allocated to a
guarantee period of the General Account equals the amounts
allocated to a Guarantee Period of the General Account paid (less
withdrawals) with interest compounded annually at the rate of 3%,
reduced by any applicable Deferred Sales Charge.

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

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General Information . . . . . . . . . . . . . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Accountants . . . . . . . . . . . . . . . . . . .
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . .
Distributor . . . . . . . . . . . . . . . . . . . . . . . .
Calculation of Performance Related Information . . . . . . . .
Delay of Payments . . . . . . . . . . . . . . . . . . . . . .
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . .
Method of Determining Contract Values . . . . . . . . . . . . . .
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . . .
Annuity Benefits . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options . . . . . . . . . . . . . . . . . . . . . . .
Variable Annuity Payment Values . . . . . . . . . . . . . . .
Annuity Unit . . . . . . . . . . . . . . . . . . . . . . . . .
Net Investment Factor . . . . . . . . . . . . . . . . . . . .
Additional Provisions . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . .

</TABLE>

PART B
STATEMENT OF ADDITIONAL INFORMATION

DEFERRED VARIABLE ANNUITY CONTRACTS

issued by

VARIABLE ACCOUNT I

and

AIG LIFE INSURANCE COMPANY

THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL
INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR
THE DEFERRED VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO
HEREIN.

THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A
PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING. FOR A COPY
OF THE PROSPECTUS DATED , CALL OR WRITE: AIG Life Insurance
Company; Attention: Variable Products, One Alico Plaza, 600 King
Street, P.O. Box 8718, Wilmington, Delaware 19899,
1-800-340-2765.

DATE OF STATEMENT OF ADDITIONAL INFORMATION: __________, 1996

</REDLINE>

TABLE OF CONTENTS

Page

<S> <C>

</TABLE>

GENERAL INFORMATION

The Company

A description of AIG Life Insurance Company (the "Company"),
and its ownership is contained in the Prospectus. The Company
will provide for the safekeeping of the assets of Variable
Account I (the "Variable Account").

Independent Accountants

The audited financial statements of the Company have been
audited by Coopers and Lybrand, independent certified public
accountants, whose offices are located in Philadelphia,
Pennsylvania.

Legal Counsel
<REDLINE>
Legal matters relating to the Federal securities laws in
connection with the Contracts described herein and in the
Prospectus are being passed upon by the law firm of Jorden Burt
Berenson & Johnson LLP, Washington, D.C..</REDLINE>

Distributor

AIG Equity Sales Corp. ("AESC"), formerly known as American
International Fund Distributors, Inc., a wholly owned subsidiary
of American International Group, Inc. and an affiliate of the
Company, acts as the distributor. The offering is on a
continuous basis. Commissions in the amount of $2,647,001 were
paid during 1994, none of which were retained by the Distributor.

Calculation Of Performance Related Information

A. Yield and Effective Yield Quotations for the Money
Market Sub-account

The yield quotation for the Money Market Sub-account to be
set forth in the Prospectus will be for a given seven day period,
and will be computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing
account having a balance of one Accumulation Unit in the Money
Market Sub-account at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from Owner accounts,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return,
and multiplying the base period return by (365/7) with the
resulting figure carried to at least the nearest hundredth of one
percent.

Any effective yield quotation for the Money Market
Sub-account to be set forth in the Prospectus will be for a given

seven day period, carried at least to the nearest hundredth of
one percent, and will be computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one Accumulation Unit in
the Money Market Sub-account at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from
Owner accounts, and dividing the difference by the value of the
account at the beginning of the base period to obtain the base
period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7
and subtracting 1 from the result, according to the following
formula:

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1.

For purposes of the yield and effective yield computations,
the hypothetical charge reflects all deductions that are charged
to all Owner accounts in proportion to the length of the base
period. For any fees that vary with the size of the account, the
account size is assumed to be the Money Market Sub-account's mean
account size. The yield and effective yield quotations do not
reflect the Deferred Sales Charge that may be assessed at the
time of withdrawal in an amount ranging up to 6% of the purchase
payments withdrawn, with the specific percentage applicable to a
particular withdrawal depending on the length of time the
purchase payment was held under the Contract and whether
withdrawals had been previously made during that Contract Year.
(See "Charges and Deductions - Deduction for Deferred Sales
Charge" on page of the Prospectus) No deductions or sales
loads are assessed upon annuitization under the Contracts.
Realized gains and losses from the sale of securities and
unrealized appreciation and depreciation of the Money Market
Sub-account and the Fund are excluded from the calculation of
yield.
<REDLINE>
B. Standardized Total Return Quotations

The standardized total return quotations for all of the
Sub-accounts will be average annual total return quotations for
the one, five, and ten year periods (or, where a Sub-account has
been in existence for a period of less than one, five or ten
years, for such lesser period) ended on a given date, and for the
period from the date monies were first placed into the
Sub-accounts until the aforesaid date. The quotations are
computed by finding the average annual compounded rates of return
over the relevant periods that would equate the initial amount
invested to the ending redeemable value, according to the
following formula:</REDLINE>

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the particular
period at the end of the particular period.

For the purposes of the total return quotations for all of the
Sub-accounts, the calculations take into effect all fees that are
charged to all Owner accounts. For any fees that vary with the
size of the account, the account size is assumed to be the
respective Sub-account's mean account size. The calculations
also assume a total withdrawal as of the end of the particular
period.
<REDLINE>
No standardized or non-standardized total return quotations
have been provided for the Zero Coupon 2000, Dreyfus Stock Index,
Money Market, Growth, Overseas, Asset Manager, Investment Grade
Bond, High Income, Worldwide Balance or Gold and Natural
Resources Portfolios, because, for the fiscal year ending
December 31, 1994, such Portfolios were not yet in
operation.</REDLINE>

Annualized total return for certain Sub-accounts as of
December 31, 1994, were as follows:

One Year Inception to Date

Conservative Investors
Growth Investors
Growth
Growth and Income

</TABLE>

*Funds were first invested in the Portfolios as listed below:

Conservative Investors
Growth Investors
Growth
Growth and Income

C. Yield Quotations for the Short-Term Multi-Market, U.S.
Government/High Grade Securities and Global Bond
Sub-accounts

The yield quotations for the Short-Term Multi-Market, U.S.
Government/High Grade Securities and Global Bond Sub-accounts
will be based on a thirty-day period. The computation is made by
dividing the net investment income per Accumulation Unit earned
during the period by the Unit Value on the last day of the
period, according to the following formula:

Yield = 2[(a - b + 1)6 - 1]
cd

Where: a = net investment income earned during the
period by the corresponding Portfolio
attributable to shares owned by the
corresponding Sub-account.

b = expenses accrued for the period (net of
reimbursements).

c = the average daily number of Accumulation
Units outstanding during the period.

d = the maximum Unit Value on the last day
of the period.

For the purposes of the yield quotations for the
Sub-accounts, the calculations take into effect all fees that are
charged to all Owner accounts. For any fees that vary with the
size of the account, the account size is assumed to be the
respective Sub-account's mean account size. The calculations do
not take into account the Deferred Sales Charge or any transfer
charges.

A Deferred Sales Charge may be assessed at the time of
withdrawal in an amount from 6% to 0% of the Purchase Payments
withdrawn, with the specific percentage applicable to a
particular withdrawal depending on the length of time the
purchase payment was held under the Contract, and whether
withdrawals had been previously made during that Contract Year.
(See "Charges and Deductions - Deduction for Deferred Sales
Charge" on page 17 of the Prospectus) There is currently a
transfer charge of $10 per transfer after a specified number of
transfers in each Contract Year. (See Transfer of Contract
Values" on page 15 of the Prospectus)

D. Non - Standardized Performance Data
<REDLINE>
1. Non-Standardized Total Return Quotations

The non-standardized</REDLINE> total return quotations for
all of the Sub-accounts to be set forth in the Prospectus will be
average annual total return quotations for the one, five, and ten
year periods (or, where a Sub-account has been in existence for a
period of less than one, five or ten years, for such lesser
period), ended on a given date for the period from the date
monies were first placed into the Sub-accounts until the
aforesaid date. The quotations are computed by finding the
average annual compounded rates of return over the relevant
periods that would equate the initial amount invested to the
ending redeemable value, according to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a
hypothetical $1,000 payment made at the
beginning of the particular period at
the end of the particular period.

For the purposes of the total return quotations, the
calculations take into effect all fees that are charged to all
Owner accounts. For any fees that vary with the size of the
account, the account size is assumed to be the respective Sub-
account's mean account size. The calculations do not, however,
assume a total withdrawal as of the end of the particular period.

Annualized total return quotations for certain Sub-accounts as
of December 31, 1994, were as follows:

One Year Inception to Date

Conservative Investors
Growth Investors
Growth
Growth and Income

</TABLE>

2. The Power of Tax-Deferred Growth

All current taxes on any income or capital gains are
deferred until money is taken out of your account. That way all
of your earnings contribute to the growth of your account. And,
since all your earnings are automatically reinvested to build
your investment base, your account is given yet another
opportunity to grow. It's called the Power of Compounding and
the following charts illustrate just how powerful it can be.

A. The Power of Tax-Deferral $10,000 At 8% Compounded Annually*

<TABLE>
<CAPTION>
33% TAX APPLIED
AFTER 33% TAX APPLIED UPON SURRENDER TAX DEFERRED

10 years $ 16,856 $ 15,782 $ 18,630
20 years $ 28,413 $ 26,789 $ 36,059
30 years $ 47,893 $ 47,744 $ 66,336
40 years $ 80,729 $ 87,637 $125,877
50 years $136,078 $163,584 $239,230

</TABLE>

B. The Power of Tax-Deferral $10,000 At 8% Compound Annually*

<REDLINE> INSERT: GRAPH OF ILLUSTRATION </REDLINE>

* These illustrations are not intended to reflect the return of
investments made in your variable annuity contract. The figures
are calculated on a fixed interest rate and assume no fluctuation
in the value of principal or the impact of any fees or sales
charges. Taxes are due on tax-deferred investments whenever
money is withdrawn from that investment.

Delay of Payments

Any payments due under the Contracts will generally be sent
to the Owner within seven (7) days of a completed request for
payment. However, the Company has reserved the right to postpone
any type of payment from the Variable Account for any period
when:

(a) the New York Stock Exchange is closed for other
than customary weekends and holidays;

(b) trading on the Exchange is restricted;

(c) an emergency exists as a result of which it is
not reasonably practicable to dispose of securities held in
the Variable Account or determine their value; or

(d) an order of the Securities and Exchange
Commission permits delay for the protection of security
holders.

The applicable rules of the Securities and Exchange
Commission shall govern as to whether the conditions in (b) and
(c) exists.

Transfers

An Owner may deposit prior to the Annuity Date, all or part
of his Contract Value into the Money Market Sub-account (the
Sending Sub-account"), and then automatically transfer those
assets into one or more of the other Sub-accounts on a systematic
basis. The amount transferred to the Sending Sub-account must be
at least $12,000 in order to initiate this option. This process
is called Automatic Dollar Cost Averaging.

The Automatic Dollar Cost Averaging option is available for
use with any of the investment options, other than the General
Account.

Automatic Dollar Cost Averaging transfers may occur monthly
or quarterly. The Owner may designate the dollar amount to be
transferred each month or elect to have a percentage transferred
each month, up to a maximum of 60 months.

The Company will make all Automatic Dollar Cost Averaging
transfers on the 15th calendar day of each month, or the next day
the New York Stock Exchange is open for business if the 15th
calendar day of the month should fall on a day the New York Stock
Exchange is closed. In order to process an Automatic Dollar Cost
Averaging transfer, the Company must have received a request in
writing by no later than the 6th calendar day of the month.

The Automatic Dollar Cost Averaging option may be canceled
at any time by written request or automatically if the value of
the Sending Sub-account subject to the Automatic Dollar Cost
Averaging option is less than $1,000.

An Owner may change his Automatic Dollar Cost Averaging
investment allocation only once during any 12 month period.

Any transfers made under this section are subject to the
conditions of the section entitled "Transfer of Contract Values"
on page __ of the Prospectus, except that the Company will not
deem the election of the Automatic Dollar Cost Averaging option
to count towards a Owner's twelve (12) free transfers.

METHOD OF DETERMINING CONTRACT VALUES

The Contract Value will fluctuate in accordance with the
investment results of the underlying Portfolio within the
Sub-account. In order to determine how these fluctuations affect
Contract Values, Accumulation Units are utilized. The value of
an Accumulation Unit applicable during any Valuation Period is
determined at the end of that period.

When the first shares of the respective Portfolios were
purchased for the Sub-accounts, the Accumulation Units for the
Sub-accounts were valued at $10. The value of an Accumulation
Unit for a Sub-account on any Valuation Date thereafter is
determined by dividing (a) by (b), where:

(a) is equal to:

(i) the total value of the net assets attributable to
Accumulation Units in the Sub-account, minus

(ii) the daily charge for assuming the risk of
guaranteeing mortality factors and expense charges
which is equal on an annual basis to 1.25% multiplied
by the daily net asset value of the Sub-account; minus

(iii) the daily charge for providing certain
administrative functions which is equal on an annual
basis to 0.15% multiplied by the daily net asset value
of the Sub-account; minus or plus

(iv) a charge or credit for any tax provision
established for the Sub-account. The Company is not
currently making any provision for taxes.

(b) is the total number of Accumulation Units applicable to
that Sub-account at the end of the Valuation Period.

The resulting value of each Sub-account Accumulation Unit is
multiplied by the respective number of Sub-account Accumulation
Units for a Contract. The Contract Value is the sum of all
Sub-account values for the Contract.

An Accumulation Unit may increase or decrease in value from
Valuation Date to Valuation Date.

ANNUITY PROVISIONS

Annuity Benefits

If the Annuitant is alive on the Annuity Date the Company
will begin making payments to the Annuitant under the payment
option or options selected. The amount of the annuity payments
will depend on the age of the payee at the time the settlement
contract is issued.

Annuity Options

The annuity options are as follows:

Option 1: Life Income. The Company will pay an annuity
during the lifetime of the payee.

Option 2: Income with 10 Years of Payments Guaranteed. The
Company will pay an annuity during the lifetime of the
payee. If, at the death of the payee, payments have been
made for less than 10 years:

(a) payments will be continued during the remainder of
the period to the successor payee; or

(b) the successor payee may elect to receive in a lump
sum the present value of the remaining payments,
commuted at the interest rate used to create the
annuity factor for this Option.

Option 3: Joint and Last Survivor Income. The Company will
pay an annuity for as long as either payee or a designated
second person is alive.

Annuity options are available on a fixed and/or a variable
basis. The Owner may allocate Contract Values to purchase only
fixed annuity payments, or to purchase only variable annuity
payments, or to purchase a combination of the two. Contract
Values which purchase fixed annuity payments will be invested in
the General Account. Contract Values which purchase variable
annuity payments will be invested in the Variable Account. The
Owner may make no transfers between the General Account and the

Variable Account after the Annuity Date. The Company also may
offer additional options at its discretion.

Variable Annuity Payment Values

A Variable Annuity is an annuity with payments which (1) are
not predetermined as to dollar amount and (2) will vary in amount
with the net investment results of the applicable Sub-account(s)
of the Variable Account. At the Annuity Date the Contract Value
in each Sub-account will be applied to the applicable Annuity
Tables contained in the Contract. The Annuity Table used will
depend upon the payment option chosen. The same Contract Value
amount applied to each payment option may produce a different
initial annuity payment. If, as of the Annuity Date, the then
current annuity rates applicable to this class of contracts will
provide a larger income than that guaranteed for the same form of
annuity under the Contracts described herein, the larger amount
will be paid.

The first annuity payment for each Sub-account is determined
by multiplying the amount of the Contract Value allocated to that
Sub-account by the factor shown in the table for the option
selected, divided by 1000.

The dollar amount of Sub-account annuity payments after the
first is determined as follows:

(a) The dollar amount of the first annuity payment is
divided by the value for the Sub-account Annuity Unit
as of the Annuity Date. This establishes the number of
Annuity Units for each monthly payment. The number of
Annuity Units remains fixed during the Annuity payment
period, subject to any transfers.

(b) The fixed number of Annuity Units is multiplied by
the Annuity Unit value for the Valuation Period 14 days
prior to the date of payment.

The total dollar amount of each Variable Annuity payment is
the sum of all Sub-account variable annuity payments less the
pro-rata amount of the annual Administrative Charge.

Annuity Unit

The value of an Annuity Unit for each Sub-account was
arbitrarily set initially at $10. This was done when the first
Portfolio shares were purchased. The Sub-account Annuity Unit
value at the end of any subsequent Valuation Period is determined
by multiplying the Sub-account Annuity Unit value for the
immediately preceding Valuation Period by the quotient of (a) and
(b) where:

(a) is the net investment factor for the Valuation
Period for which the Sub-account Annuity Unit value is
being determined; and

(b) is the assumed investment factor for such
Valuation Period. The assumed investment factor
adjusts for the interest assumed in determining the
first variable annuity payment. Such factor for any
Valuation Period shall be the accumulated value, at the
end of such period, of $1.00 deposited at the beginning
of such period at the assumed investment rate of 5%.

Net Investment Factor

The net investment factor is used to determine how
investment results of the Fund affect Variable Account Values
within the Sub-accounts from one Valuation Period to the next.
The net investment factor for each Sub-account for any Valuation
Period is determined by dividing (a) by (b) and subtracting (c)
from the result, where:

(a) is equal to:

(i) the net asset value per share of the Portfolio
held in the Sub-account determined at the end of that
Valuation Period; plus

(ii) the per share amount of any dividend or capital
gain distribution made to the Portfolio if the "ex-dividend"
date occurs during that same Valuation Period; plus or minus

(iii) a per share charge or credit, which is
determined by the Company, for changes in tax reserves
resulting from investment operations of the Sub-account.

(b) is equal to:

(i) the net asset value per share of the Portfolio
held in the Sub-account determined as of the end of the
prior Valuation Period; plus or minus

(ii) the per share charge or credit for any change in
tax reserves for the prior Valuation Period.

(i) the percentage factor representing the Mortality
and Expense Risk Charge, plus

(ii) the percentage factor representing the daily
Administrative Charge.

The net investment factor may be greater or less than the assumed
investment factor; therefore, the Annuity Unit value may increase
or decrease from Valuation Period to Valuation

Additional Provisions

The Company may require proof of the age of the Annuitant
before making any life annuity payment provided for by the
Contract. If the age of the Annuitant has been misstated the
Company will compute the amount payable based on the correct age.
If annuity payments have begun, any underpayments that may have
been made will be paid in full with the next annuity payment.
Any overpayments, unless repaid to the Company in one sum, will
be deducted from future annuity payments until the Company is
repaid in full.

If a Contract provision requires that a person be alive, the
Company may require due proof that the person is alive before the
Company acts under that provision.

The Company will give the payee under an annuity payment
option a settlement contract for the payment option.

FINANCIAL STATEMENTS

The financial statements of the Company and the Variable
Account included herein shall be considered only as bearing upon
the ability of the Company to meet its obligations under the
Contracts.

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994

<TABLE>
<CAPTION>
Assets:
Investments at Market Value:
Alliance Variable Products Series Fund, Inc.: Shares
------
<S> <C>
Money Market Portfolio 4,401,735.300
Premier Growth Portfolio 182,983.633
Growth & Income Portfolio 431,247.683
International Portfolio 371,515.329
Short-Term Multi-Market Portfolio 91,696.989
Global Bond Portfolio 90,017.228
U.S. Government/High Grade
Securities Portfolio 303,951.808
Global Dollar Government Portfolio 68,723.756
North American Government Portfolio 337,750.004
Utility Income Portfolio 110,674.832
Conservative Investors Portfolio 62,623.032
Growth Investors Portfolio 29,368.355
Growth Portfolio 465,730.743
Total Return Portfolio 32,187.140
Worldwide Privitization Portfolio 105,236.863

Total Investments

Dividends Receivable
Recievable from AIG Life

Total Assets

Equity:
Contract Owners Equity

Total Contract Owners Equity

Total Liabilities and Equity

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Assets:
Investments at Market Value:
Alliance Variable Products Series Fund, Inc.: Cost
<S> <C> <C>
----- ------
Money Market Portfolio $4,401,735 $4,401,735
Premier Growth Portfolio $2,280,310 $2,263,495
Growth & Income Portfolio $5,189,194 $5,114,586
International Portfolio $4,850,624 $4,785,117
Short-Term Multi-Market Portfolio $940,806 $908,707
Global Bond Portfolio $927,109 $883,969
U.S. Government/High Grade
Securities Portfolio $3,067,589 $3,021,271
Global Dollar Government Portfolio $692,023 $676,232
North American Government Portfolio $3,395,515 $2,968,823
Utility Income Portfolio $1,125,454 $1,102,311
Conservative Investors Portfolio $627,241 $630,614
Growth Investors Portfolio $292,382 $289,572
Growth Portfolio $4,750,184 $4,904,134
Total Return Portfolio $336,641 $335,068
Worldwide Privitization Portfolio $1,056,109 $1,062,882

Total Investments $33,932,916 $33,348,516

Dividends Receivable $17,161
Recievable from AIG Life $3,919

Total Assets $33,369,596

Equity:
Contract Owners Equity $33,369,596

Total Contract Owners Equity $33,369,596

Total Liabilities and Equity $33,369,596
</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994

<TABLE>
<CAPTION>
Money Premier
Total Market Growth
Portfolio Portfolio
<S> <C> <C> <C>
Investment Income (Loss):
Dividends $195,713 $59,413 $2,236

Expenses:
Mortality & Expense Risk Fees $142,466 $18,917 $11,914
Daily Adminstrative Charges $16,567 $2,173 $1,401

$159,033 $21,090 $13,315

Net Investment Income (Loss) $36,680 $38,323 ($11,079)

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on Investment
Activity ($19,154) - $4,147
Change in Unrealized Appreciation
(Depreciation) ($595,557) - ($21,343)

Net Gain (Loss) on Investments ($614,711) - ($17,196)

Increase (Decrease) in Net Assets
Resulting From Operations ($578,031) $38,323 ($28,275)

</TABLE>
See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994

<TABLE>
<CAPTION>
Growth & Inter- Short-Term
Income national Multi-Market
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment Income (Loss):
Dividends $45,250 $7,283 $11,916

Expenses:
Mortality & Expense Risk Fees $27,377 $19,686 $3,312
Daily Adminstrative Charges $3,235 $2,277 $393

$30,612 $21,963 $3,705

Net Investment Income (Loss) $14,638 ($14,680) $8,211

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on Investment
Activity $2,879 $4,498 $86
Change in Unrealized Appreciation
(Depreciation) ($79,392) ($68,691) ($32,855)

Net Gain (Loss) on Investments ($76,513) ($64,193) ($32,769)

Increase (Decrease) in Net Assets
Resulting From Operations ($61,875) ($78,873) ($24,558)

</TABLE>
See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994 (Continued)

<TABLE>
<CAPTION>
Global U.S. Gov't Global
Bond High Grd Dollar Gov't
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment Income (Loss):
Dividends $34,107 $35,508 -

Expenses:
Mortality & Expense Risk Fees $5,851 $14,151 $3,172
Daily Adminstrative Charges $695 $1,636 $371

$6,546 $15,787 $3,543

Net Investment Income (Loss) $27,561 $19,721 ($3,543)

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on Investment ($5,329) ($10,894) $47
Change in Unrealized Appreciation
(Depreciation) (45,024) ($42,340) ($15,791)

Net Gain (Loss) on Investments ($50,353) ($53,234) ($15,744)

Increase (Decrease) in Net Assets
Resulting From Operations ($22,792) ($33,513) ($19,287)
</TABLE>
See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994 (Continued)

<TABLE>
<CAPTION>
N.Amer. Utility
Gov't Income
Portfolio Portfolio
<S> <C> <C>
Investment Income (Loss):
Dividends - -

Expenses:
Mortality & Expense Risk Fees $17,458 $4,679
Daily Adminstrative Charges $2,090 $547

$19,548 $5,226

Net Investment Income (Loss) ($19,548) ($5,226)

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on Investment
Activity ($16,961) $1,704
Change in Unrealized Appreciation
(Depreciation) ($426,693) ($23,142)

Net Gain (Loss) on Investments ($443,654) ($21,438)

Increase (Decrease) in Net Assets
Resulting From Operations ($463,202) ($26,664)

</TABLE>
See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994 (Continued)

Conservative Growth
Investors Investors
Portfolio Portfolio

<S> <C> <C>
Investment Income (Loss):
Dividends - -

Expenses:
Mortality & Expense Risk Fees $1,431 $699
Daily Adminstrative Charges $163 $81
$1,594 $780

Net Investment Income (Loss) ($1,594) ($780)

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on Investment Activity ($37) ($375)
Change in Unrealized Appreciation
(Depreciation) $3,373 ($2,809)

Net Gain (Loss) on Investments $3,336 ($3,184)

Increase (Decrease) in Net Assets
Resulting From Operations $1,742 ($3,964)

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994 (Continued)

<TABLE>
<CAPTION>
Total Worldwide
Growth Return Privatization
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment Income (Loss):
Dividends - - -

Expenses:
Mortality & Expense Risk Fees $11,248 $427 $2,144
Daily Adminstrative Charges $1,248 $43 $214

$12,496 $470 $2,358

Net Investment Income (Loss) ($12,496) ($470) ($2,358)

Realized and Unrealized Gain (Loss)
on Investments:

Realized Gain (Loss) on
Investment Activity $1,108 ($28) $1
Change in Unrealized Appreciation
(Depreciation) $153,950 ($1,573) $6,773

Net Gain (Loss) on Investments $155,058 ($1,601) $6,774

Increase (Decrease) in Net Assets
Resulting From Operations $142,562 ($2,071) $4,416

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Money
Market
Total Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $36,680 $38,323
Realized Gain (Loss) on Investment
Activity ($19,194) --
Change in Unrealized Appreciation
(Depreciation) of Investments ($595,557) --

Increase (Decrease) in Net Assets
Resulting from Operations ($578,031) $38,323

Capital Transactions:
Contract Deposits $34,923,601 $12,769,522
Transfers Between Funds -- ($6,081,820)
Transfers From (To) AIG Life ($2,196,064) ($2,262,382)
Administrative Charges ($1,474) ($23)
Death Benefits ($105,575) ($105,575)
Contract Withdrawals ($267,697) ($17,149)
Deferred Sales Charges ($3,900) --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $32,348,891 $4,302,573

Total Increase (Decrease) in Net
Assets $31,770,860 $4,340,896
Net Assets, at Beginning of Year $1,598,736 $85,516

Net Assets, at End of Year $33,369,596 $4,426,412

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Money
Market
Total Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $6,824 $330
Realized Gain (Loss) on Investment
Activity $246 --
Change in Unrealized Appreciation
(Depreciation) of Investments $11,768 --

Increase (Decrease) in Net Assets
Resulting from Operations $18,838 $330

Capital Transactions:
Contract Deposits $1,471,184 $335,777
Transfers Between Funds -- ($250,591)
Administrative Charges ($4,569) --
Contract Withdrawals ($90) --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $1,466,525 $85,186

Total Increase (Decrease) in
Net Assets $1,485,363 $85,516
Net Assets, at Beginning of Year $113,373 --

Net Assets, at End of Year $1,598,736 $85,516

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Premier Growth &
Growth Income
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($11,079) $14,638
Realized Gain (Loss) on Investment
Activity $4,147 $2,879
Change in Unrealized Appreciation
(Depreciation) of Investments ($21,343) ($79,392)

Increase (Decrease) in Net Assets
Resulting from Operations ($28,275) ($61,875)

Capital Transactions:
Contract Deposits $1,647,838 $3,463,022
Transfers Between Funds $457,808 $1,436,775
Transfers From (To) AIG Life $15,998 $21,514
Administrative Charges ($168) ($291)
Death Benefits -- --
Contract Withdrawals ($15,667) ($73,276)
Deferred Sales Charges ($380) ($1,208)

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $2,105,429 $4,846,536

Total Increase (Decrease) in Net
Assets $2,077,154 $4,784,661
Net Assets, at Beginning of Year $192,615 $333,025

Net Assets, at End of Year $2,269,769 $5,117,686

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Premier Growth &
Growth Income
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($515) ($744)
Realized Gain (Loss) on Investment
Activity -- $120
Change in Unrealized Appreciation
(Depreciation) of Investments $4,529 $4,110

Increase (Decrease) in Net Assets
Resulting from Operations $4,014 $3,486

Capital Transactions:
Contract Deposits $161,568 $280,031
Transfers Between Funds $27,033 $41,585
Administrative Charges -- ($694)
Contract Withdrawals -- ($6)

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $188,601 $320,916

Total Increase (Decrease) in Net
Assets $192,615 $324,402
Net Assets, at Beginning of Year -- $8,623

Net Assets, at End of Year $192,615 $333,025

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Inter- Short-Term
national Multi-Market
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($14,680) $8,211
Realized Gain (Loss) on Investment
Activity $4,498 86
Change in Unrealized Appreciation
(Depreciation) of Investments ($68,691) ($32,855)

Increase (Decrease) in Net Assets
Resulting from Operations ($78,873) ($24,558)

Capital Transactions:
Contract Deposits $3,606,659 $346,929
Transfers Between Funds $1,074,155 $440,344
Transfers From (To) AIG Life $24,038 --
Administrative Charges ($286) ($77)
Death Benefits -- --
Contract Withdrawals ($56,095) ($3,990)
Deferred Sales Charges ($1,165) --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $4,647,306 $783,206

Total Increase (Decrease) in Net
Assets $4,568,433 $758,648
Net Assets, at Beginning of Year $220,959 $149,394

Net Assets, at End of Year $4,789,392 $908,042

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Inter- Short-Term
national Multi-Market
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($337) $1,713
Realized Gain (Loss) on Investment
Activity -- $30
Change in Unrealized Appreciation
(Depreciation) of Investments $3,185 $1,630

Increase (Decrease) in Net Assets
Resulting from Operations $2,848 $3,373

Capital Transactions:
Contract Deposits $164,265 $90,971
Transfers Between Funds $53,846 $6,147
Administrative Charges -- ($1,586)
Contract Withdrawals -- ($43)

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $218,111 $95,489

Total Increase (Decrease) in Net
Assets $220,959 $98,862
Net Assets, at Beginning of Year -- $50,532

Net Assets, at End of Year $220,959 $149,394

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Global U.S. Gov't Global
Bond High Grade Dollar Gov't
Portfolio Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $27,561 $19,721 ($3,543)
Realized Gain (Loss) on Investment
Activity ($5,329) ($10,894) $47
Change in Unrealized Appreciation
(Depreciation) of Investments ($45,024) ($42,340) ($15,791)

Increase (Decrease) in Net Assets
Resulting from Operations ($22,792) ($33,513) ($19,287)

Capital Transactions:
Contract Deposits $553,883 $2,242,232 $556,089
Transfers Between Funds $165,632 $421,682 $160,981
Transfers From (To) AIG Life -- ($2,455) ($16,815)
Administrative Charges ($130) ($368) --
Death Benefits -- -- --
Contract Withdrawals ($20,050) ($18,733) ($5,486)
Deferred Sales Charges ($772) ($375) --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $698,563 $2,641,983 $694,769

Total Increase (Decrease) in Net
Assets $675,771 $2,608,470 $675,482
Net Assets, at Beginning of Year $207,211 $410,016 --

Net Assets, at End of Year $882,982 $3,018,486 $675,482

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Global U.S. Gov't Global
Bond High Grade Dollar Gov,t
Portfolio Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $7,236 ($859) --
Realized Gain (Loss) on Investment
Activity $96 -- --
Change in Unrealized Appreciation
(Depreciation) of Investments $2,173 ($3,859) --

Increase (Decrease) in Net Assets
Resulting from Operations $9,505 ($4,718) --

Capital Transactions:
Contract Deposits $118,132 $320,440 --
Transfers Between Funds $27,686 $94,294
Administrative Charges ($2,289) -- --
Contract Withdrawals ($41) -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $143,488 $414,734 --

Total Increase (Decrease) in Net
Assets $152,993 $410,016 --
Net Assets, at Beginning of Year $54,218 -- --

Net Assets, at End of Year $207,211 $410,016 --

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
N. Amer. Utility
Gov't Income
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($19,548) ($5,226)
Realized Gain (Loss) on Investment
Activity ($16,961) $1,704
Change in Unrealized Appreciation
(Depreciation) of Investments ($426,693) ($23,142)

Increase (Decrease) in Net Assets
Resulting from Operations ($463,262) ($26,664)

Capital Transactions:
Contract Deposits $3,241,845 $1,022,214
Transfers Between Funds $233,697 $109,771
Transfers From (To) AIG Life -- --
Administrative Charges -- --
Death Benefits -- --
Contract Withdrawals ($47,274) ($4,223)
Deferred Sales Charges -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $3,428,268 $1,127,762

Total Increase (Decrease) in Net
Assets $2,965,066 $1,101,098
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year $2,965,066 $1,101,098

</TABLE>

See Notes To Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
N. Amer. Utility
Gov't Income
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) -- --
Realized Gain (Loss) on Investment
Activity -- --
Change in Unrealized Appreciation
(Depreciation) of Investments -- --

Increase (Decrease) in Net Assets
Resulting from Operations -- --

Capital Transactions:
Contract Deposits -- --
Transfers Between Funds -- --
Administrative Charges -- --
Contract Withdrawals -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions -- --

Total Increase (Decrease) in Net
Assets -- --
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year -- --

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Conservative Growth
Investors Investors
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($1,594) ($780)
Realized Gain (Loss) on Investment
Activity ($37) ($375)
Change in Unrealized Appreciation
(Depreciation) of Investments $3,373 ($2,809)

Increase (Decrease) in Net Assets
Resulting from Operations $1,742 ($3,964)

Capital Transactions:
Contract Deposits $549,380 $222,714
Transfers Between Funds $79,401 $70,532
Transfers From (To) AIG Life -- --
Administrative Charges -- --
Death Benefits -- --
Contract Withdrawals ($542) --
Deferred Sales Charges -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $628,239 $293,246

Total Increase (Decrease) in Net
Assets $629,981 $289,282
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year $629,981 $289,282

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Conservative Growth
Investors Investors
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $ -- $ --
Realized Gain (Loss) on Investment
Activity -- --
Change in Unrealized Appreciation
(Depreciation) of Investments -- --

Increase (Decrease) in Net Assets
Resulting from Operations -- --

Capital Transactions:
Contract Deposits -- --
Transfers Between Funds -- --
Administrative Charges -- --
Contract Withdrawals -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transact -- --

Total Increase (Decrease) in Net
Assets -- --
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year $ -- $ --

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Total
Growth Return
Portfolio Portfolio

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($12,496) ($470)
Realized Gain (Loss) on Investment
Activity $1,108 ($28)
Change in Unrealized Appreciation
(Depreciation) of Investments $153,950 ($1,573)

Increase (Decrease) in Net Assets
Resulting from Operations $142,562 ($2,071)

Capital Transactions:
Contract Deposits $3,506,333 $294,209
Transfers Between Funds $1,230,919 $43,406
Transfers From (To) AIG Life $24,038 --
Administrative Charges ($131) --
Death Benefits -- --
Contract Withdrawals ($4,434) ($674)
Deferred Sales Charges -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $4,756,725 $336,941

Total Increase (Decrease) in Net
Assets $4,899,287 $334,870
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year $4,899,287 $334,870

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Total
Growth Return
Portfolio Portfolio

Increase (Decrease) in Net Assets
Resulting from Operations -- --

Capital Transactions:
Contract Deposits -- --
Transfers Between Funds -- --
Administrative Charges -- --
Contract Withdrawals -- --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions -- --

Total Increase (Decrease) in Net
Assets -- --
Net Assets, at Beginning of Year -- --

Net Assets, at End of Year -- --

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1994
Worldwide
Privatization
Portfolio

<S> <C>

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ($2,358)
Realized Gain (Loss) on Investment
Activity $1
Change in Unrealized Appreciation
(Depreciation) of Investments $6,773

Increase (Decrease) in Net Assets
Resulting from Operations $4,416

Capital Transactions:
Contract Deposits $900,732
Transfers Between Funds $156,717
Transfers From (To) AIG Life --
Administrative Charges --
Death Benefits --
Contract Withdrawals ($104)
Deferred Sales Charges --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions $1,057,345

Total Increase (Decrease) in Net
Assets $1,061,761
Net Assets, at Beginning of Year --

Net Assets, at End of Year $1,061,761

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and December 31, 1993

<TABLE>
<CAPTION>
1993
Worldwide
Privatization
Portfolio

<S> <C>

Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $ --
Realized Gain (Loss) on Investment
Activity --
Change in Unrealized Appreciation
(Depreciation) of Investments --

Increase (Decrease) in Net Assets
Resulting from Operations --

Capital Transactions:
Contract Deposits --
Transfers Between Funds --
Administrative Charges --
Contract Withdrawals --

Increase (Decrease) in Net Assets
Resulting from Capital
Transactions --

Total Increase (Decrease) in Net
Assets --
Net Assets, at Beginning of Year --

Net Assets, at End of Year $ --

</TABLE>

See Notes to Financial Statements

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

NOTES TO FINANCIAL STATEMENTS

1. History

Variable Account I (the "Account") is a separate investment
account maintained under the provisions of Delaware Insurance
Law by AIG Life Insurance Companv (the "Company"), a
subsidiary of American International Group, Inc. The Account
operates as a unit investment trust registered under the
Investment Company Act of 1940, as amended, and supports the
operations of the Company's individual single purchase payment
deferred variable annuity contracts, individual deferred
variable annuity contracts and group deferred variable annuity
contracts (the "contracts"). The Account invests in shares of
Alliance Variable Products Series Fund. Inc. (the "Fund'').
The Fund consists of fifteen series: Money Market Portfolio;
Short-Term Multi-Market Portfolio; Premier Growth Portfolio
(formerly the Growth Portolio); Growth and Income Portfolio;
International Portfolio; Global Bond Portfolio: U.S.
Government/High Grade Securities Portfolio; Global Dollar
Government Portfolio; North American Government Portfolio;
Utility Income Portfolio; Conservative Investors Portfolio;
Growth Investors Portfolio; Growth Portfolio; Total Return
Portfolio; and Worldwide Privatization Portfolio. The Account
invests in shares of other funds which are not available to
these contracts.

On June 22,1992, the initial investment was made in the Fund.

The assets of the Account are the property of the Company. The
portion of the Account's assets applicable to the contracts
are not chargeable with liabilities arising out of any other
business conducted by the Company.

In addition to the Account, a contract owner may also allocate
funds to the General Account, which is part of the Company's
general account. Amounts allocated to the General Account are
credited with a guaranteed rate for one year. Because of
exemptive and exclusionary provisions. interests in the
General Account have not been registered under the Securities
Act of 1933 and the General Account has not been registered as
an investment company under the Investment Company Act of
1940.

2. Significant Accounting Policies

The following is a summary of significant accounting policies
followed by the Account in preparation of the financial

statements in conformity with generally accepted accounting
principles.

A. Investment Valuation--The investment in the Fund is
stated at market value which is the net asset value of
each of the respective series as determined at the close
of business on the last working day of the year by the
Fund.

B. Accounting for Investments--Investment transactions are
accounted for on the date the investments are purchased
or sold. Dividend income is recorded on the ex-dividend
date.

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I

NOTES TO FINANCIAL STATEMENTS (Continued)

C. Federal Income Taxes--The Companv is taxed under federal
law as a life insurance company. The Account is part of
the Companv's total operations and is not taxed
separately. Under existing federal law. no taxes are
payable on investment income and realized capital gains
of the Account.

3. Contract Charges

Daily charges for mortality and expense risks assumed by the
Company are assessed through the daily unit value calculation
and are equivalent on an annual basis to 1.25% of the value of
the contracts.

An annual administrative expense charge of $30 is assessed
against each contract on its anniversary date bv surrendering
units. Daily charyes for administrative expenses are assessed
through the daily unit value calculation and are equivalent on
an annual basis to 0.15% of the value of the contracts.

The contracts provide that in the event that a contract owner
withdraws all or a portion of the contract value within six
contract years there will be assessed a deferred sales charge.
The deferred sales charge is based on a table of charges, of
which the maximum charge is currently 6% of the contract value
subject to a maximum of 9% of purchase payments.

Certain states impose premium taxes upon contracts. The
Companv intends, except in Pennsylvania, to advance premium
taxes due until the contract is surrendered or annuitized.

AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (Continued)

4. Purchases of Investments

For the Year Ended December 31, 1994, investment activity in
the Fund was as follows:

<TABLE>
<CAPTION> Cost Of Proceeds
Shares of Purchases From Sales

<S> <C> <C>
Alliance Variable Products Series Fund, Inc.:
Money Market Portfolio ................$ 11,080,085 $6,763,878
Premier Growth Portfolio .............. 2,345,751 257,683
Growth & Income Portfolio ............ 4,956,639 98,568
International Portfolio ............... 4,705,426 77,095
Short-Term Multi-Market Portfolio ..... 891,499 99,428
Global Bond Portfolio ................ 794,179 67,109
U.S. Government/High Grade
Securties Portfolio .................. 2,858,253 193,599
Global Dollar Government Porttolio ... 699,038 7,062
North American Government Portfolio .... 3,931,308 518,821
Utility Income Portfolio .............. 1,173,929 50,176
Conservative Investors Portfolio ..... 647,081 19,804
Growth Investors Portfolio ............ 311,192 18,434
Growth Portfolio ..................... 4,790,036 40,898
Total Return Portfolio ................ 337,615 943
Worldwide Privatizalion Portfolio .... 1,056,582 474

</TABLE>

For the Year Ended December 31, 1993, investment
activity in the Fund was as follows:

Cost Of Proceeds
Shares of Purchases From Sales

Alliance Variable Products Series Fund, Inc.:

Money Market Porttolio ................ 301,287 $215,758
Premium Growth Portfolio ............. 188,138 40
Growth & Income Portfolio ............ 320,939 764
International Portfolio .............. 217,795
Short-Term Multi-Market Portfolio .... 99,290 2,080
Global Bond Portfolio ................ 154,374 3,606
U.S. Government/High Grade
Securities Portfolio ............... 413,890
Global Dollar Government Portfolio
North American Government Portfolio .
Utility Income Portfolio
Conservative Investors Portfolio
Growth Investors Portfolio
Growth Portfolio
Total Return Portfolio
Worldwide Privatization Portfolio

</TABLE>

AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (Continued)

5. Net Increase (Decrease) in Accumulation Units
For the year ended December 31, 1994, transactions in
accumulation units of the account wre as follows:

<TABLE>
<CAPTION>
Money Premier
Market Growth
Portfolio Portfolio
<S> <C><C>
Units Purchased ................... 1,253,525.78 133,628.57
Units Withdrawn ................... (12,144.37) 25,335.12
Units Transferred Between Funds ... (596,866.46) 44,994.43
Units Transferred From (To) AIG Life (221,682.29) 1,485.94
Net Increase (Decrease) ........... 422,832.66 205,444.06
Units, at Beginning of the Year ... 8,487.20 18,106.16

Units, at End of the Year.......... 431,319.86 223,550.22

Unit Value at December 31, 1994 ... 10.26 10.15
</TABLE>

<TABLE>
<CAPTION>
Global U.S. Gov't
Bond High Grd
Portfolio Portfolio
<S> <C> <C>
Units Purchased ................... 51,641.68 236,854.06
Units Withdrawn ................... (2,053.41) (2,051.82)
Units Transferred Between Funds ... 17,440.44 44,808.47
Units Transferred From (To) AIG Life --- (246.52)

Net Increase (Decrease) ........... 67,028.71 279,364.19
Units, at Beginning of the Year ... 18,846.45 41,210.45

Units, at End of the Year.......... 85,875.16 320,574.64

Unit Value at December 31, 1994 ... 10.28 9.42
</TABLE>

<TABLE>
<CAPTION>
Conservative Growth
Investors Investors
Portfolio Portfolio
<S> <C> <C>
Units Purchased ................... 54,961.06 22,423.69
Units Withdrawn ................... (54.36) 0.00
Units Transferred Between Funds ... 7,961.32 7,069.09
Units Transferred From (To) AIG Life - -

Net Increase (Decrease) ........... 62,868.02 29,492.78
Units, at Beginning of the Year ... - -

Units, at End of the Year.......... 62,868.02 29,492.78

Unit Value at December 31, 1994 ... 10.02 9.81
</TABLE>

AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (Continued)

5. Net Increase (Decrease) in Accumulation Units
For the year ended December 31, 1994, transactions
in accumulation units of the account were as follows:

<TABLE>
<CAPTION>
Growth & Inter-
Income national
Portfolio Portfolio
<S> <C> <C>
Units Purchased ................... 293,863.02 330,309.00
Units Withdrawn ................... (6,362.95) (5,300.66)
Units Transferred Between Funds ... 124,937.97 98,563.29
Units Transferred From (To) AIG Life (1,799.54) 2,118.64

Net Increase (Decrease) ........... 410,638.50 425,690.27
Units, at Beginning of the Year ... 28,041.82 21,717.14

Units, at End of the Year.......... 438,680.32 447,407.41

Unit Value at December 31, 1994 ... 11.67 10.71
</TABLE>

<TABLE>
<CAPTION>
Global N.Amer.
Dollar Gov't Gov't
Portfolio Portfolio
<S> <C> <C>
Units Purchased ................... 55,570.67 323,491.81
Units Withdrawn ................... (548.46) (4,776.54)
Units Transferred Between Funds ... 14,298.61 23,764.08
Units Transferred From (To) AIG Life - (1,661.99)

Net Increase (Decrease) ........... 69,320.82 340,817.36
Units, at Beginning of the Year ... - -

Units, at End of the Year.......... 69,320.82 340,817.36

Unit Value at December 31, 1994 ... 9.74 8.70
</TABLE>

<TABLE>
<CAPTION>
Total
Growth Return
Portfolio Portfolio
<S> <C> <C>
Units Purchased ................... 345,193.44 30,324.65
Units Withdrawn ................... (451.59) (69.77)
Units Transferred Between Funds ... 120,661.01 4,429.65
Units Transferred From (To) AIG Life 2,285.20 -

Net Increase (Decrease) ........... 467,688.06 34,684.53
Units, at Beginning of the Year ... - -

Units, at End of the Year.......... 467,688.06 34,684.53

Unit Value at December 31, 1994 ... 10.48 9.65
</TABLE>

AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (continued)

5. Net Increase (Decrease) in Accumulation Units
For the year ended December 31, 1994, transactions in
accumulation units of the account were as follows:

<TABLE>
<CAPTION>
Short-Term
Multi-Market
Portfolio
<S> <C>
Units Purchased ................... 33,870.97
Units Withdrawn ................... (396.00)
Units Transferred Between Funds ... 47,731.06
Units Transferred From (To) AIG Life -

Net Increase (Decrease) ........... 81,206.03
Units, at Beginning of the Year ... 14,511.57

Units, at End of the Year.......... 95,717.60

Unit Value at December 31, 1994 ... 9.49
</TABLE>

<TABLE>
<CAPTION>
Utility
Income
Portfolio
<S> <C>
Units Purchased ................... 101,066.47
Units Withdrawn ................... (419.79)
Units Transferred Between Funds ... 10,957.34
Units Transferred From (To) AIG Life -

Net Increase (Decrease) ........... 111,604.02
Units, at Beginning of the Year ... -

Units, at End of the Year.......... 111,604.02

Unit Value at December 31, 1994 ... 9.87

</TABLE>

<TABLE>
<CAPTION>
World
Privatization
Portfolio
<S> <C>
Units Purchased ................... 90,029.57
Units Withdrawn ................... (10.37)
Units Transferred Between Funds ... 15,654.88
Units Transferred From (To) AIG Life -

Net Increase (Decrease) ........... 105,674.08
Units, at Beginning of the Year ... -

Units, at End of the Year.......... 105,674.08

Unit Value at December 31, 1994 ... 10.05

Coopers & Lybrand [Letterhead]

REPORT OF INDEPENDENT ACCOUNTANT

To the Contract Owners of
AIG Life Insurance Company
Variable Account I

We have audited the accompanying statements of assets and
liabilities of AIG Life Insurance Company Variable Account I
(the "Account") comprising the Money Market, Premier Growth,
Growth and Income, Intemational, ShortTerm Multi-Market,
Global Bond, U.S. Government/High Grade Securities. Global
Dollar Government, North American Government, Utility Income,
Conservative Investors, Growth Investors, Growth, Total
Return, and Worldwide Privatization Subaccounts, as of
December 31, 1994, and 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
management of Variable Account I. Our responsibility is to
express an opinion on these financial statements based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards. 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
investments held by the custodian at Decembcr 31, 1994. 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 AIG Life Insurance Company Variable Account I as
of December 31, 1994, and 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 generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 13, 1995

AIG LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of
American International Group, Inc.)

REPORT ON AUDITS OF FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
AIG Life Insurance Company:

We have audited the accompanying balance sheets of AIG Life
Insurance Company (a wholly-owned subsidiary of American
International Group, Inc.) as of December 31, 1994 and 1993,
and the related statements of income, stockholders' equity and
cash flows for each of the three years in the period ended
December 31, 1994. 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 generally accepted
auditing standards. 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 financial
position of AIG Life Insurance Company as of December 31, 1994
and 1993, and the results of its operations and its cash flows
for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting
principles.

As discussed in Note 1 (h) to the financial statements, the
Company changed in 1993, its method of accounting for
investments in certain fixed maturity securities, and in 1992,
its method of accounting for income taxes.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 22, 1995

AIG LIFE INSURANCE COMPANY
BALANCE SHEETS
(in thousands)

</TABLE>
<TABLE>
<CAPTION>
December 31,

1994 1993

<S> <C> <C>
Assets

Investments and cash:
Fixed maturities:
Bonds available for sale, at market value $1,308,564 $1,291,394
(cost: 1994 $1,337,720; 1993 - $1,182,771)
Equity securities:
Common stock
(cost: 1994 - $1,670; 1993 - $1,670) 2,113 1,820
Non-redeemable preferred stocks,
(cost: 1994 - $2,000; 1993 - $2,000) 2,000 2,000
Mortgage loans on real estate, net 177,377 141,035
Real estate, net of accumulated depreciation of
$1,156 in 1994; and $845 in 1993 11,441 11,541
Policy loans 1,372,224 187,769
Other invested assets 62,620 50,455
Short-term investments 87,120 105,481
Cash 4,368 3,689

Total investments and cash 3,027,827 1,795,184

Amounts due from related parties 6,610 4,569
Investment income due and accrued 116,449 34,426
Premium and insurance balances receivable - net 20,476 27,412
Reinsurance assets 207,626 212,950
Deferred policy acquisition costs 54,474 39,568
Deferred income taxes 24,379 -
Separate and variable accounts 83,718 56,563
Other assets 2,909 2,529

Total assets $3,544,468 $2,173,201

</TABLE>

See accompanying notes to financial statement

AIG LIFE INSURANCE COMPANY
BALANCE SHEETS

(in thousands, except share amounts)

<TABLE>
<CAPTION>
December 31,

1994 1993

<S> <C> <C>
Liabilities

Policyholders' funds on deposit $2,525,030 $1,140,426
Future policy benefits 483,211 519,118
Reserve for unearned premiums 48,591 31,382
Policy and contract claims 114,608 54,192
Reserve for commissions, expenses and taxes 33,991 10,936
Insurance balances payable 19,168 14,207
Deferred income taxes 24,785
Amounts due to related parties 12,376 12,458
Federal income tax payable 13,349 10,641
Separate and variable accounts 74,076 48,420
Other liabilities 22,111 68,771

Total liabilities 3,346,511 1,935,336

Commitments and contingencies

Stockholders' Equity

Common stock, $5 par value; 1,000,000 shares
authorized; 976,703 shares issued and
outstanding 4,884 4,884
Additional paid-in capital 123,283 123,283
Unrealized (depreciation) appreciation of
investments, net of taxes of
($8,093) in 1994 and $21,624 in 1993 (15,029) 40,159
Retained earnings 84,819 69,539

Total stockholders' equity 197,957 237,865

Total liabilities and stockholders' equity $3,544,468 $2,173,201

</TABLE>

See accompanying notes to financial statements.

AIG LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
(in thousands)

<TABLE>
<CAPTION>
Years ended December 31,

1994 1993 1992

<S> <C> <C> <C>
Revenues:
Premiums $265,990 $168,547 $142,539
Net investment income 238,899 137,108 124,001
Realized capital gains 1,953 9,280 9,432

Total revenues 506,842 314,935 275,972

Benefits and expenses:
Benefits to policyholders 196,175 135,309 105,665
Increase in future policy benefits
and policyholders' funds on deposit 158,935 81,908 88,479
Acquisition and insurance expenses 127,941 87,126 71,633

Total benefits and expense 483,051 304,343 265,777

Income before income taxes and
cumulative effect of accounting change 23,791 10,592 10,195

Income taxes (benefits):
Current 27,958 23,425 6,391
Deferred (19,447) (20,991) (3,143)

Total income taxes 8,511 2,434 3,248

Income before cumulative effect of
accounting change 15,280 8,158 6,947

Cumulative effect of accounting change - - 5,944

Net income $15,280 $8,158 $12,891

</TABLE>

See accompanying notes to financial

AIG LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

Years ended December 31,

1994 1993 1992

<S> <C> <C> <C>
Common stock

Balance at beginning of year $4,884 $4,884 $4,884

Balance at end of year 4,884 4,884 4,884

Additional paid-in capital

Balance at beginning of year 123,283 98,283 98,283
Capital contribution - 25,000 -

Balance at end of year 123,283 123,283 98,283

Unrealized appreciation (depreciation)
of investments, net of taxes
Balance at beginning of year 40,159 146 232
Change during year (84,904) (60) (131)
Deferred income tax benefit on changes 29,716 19 45
Cumulative effect of accounting change,
net of taxes of $21,568 - 40,054 -

Balance at end of year (15,029) 40,159 146

Retained earnings
Balance at beginning of year 69,539 61,381 48,490
Net income 15,280 8,158 12,891

Balance at end of year 84,819 69,539 61,381

Total stockholders' equity $197,957 $237,865 $164,694

</TABLE>

See accompanying notes to financial statements.

AIG LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS

(in thousands)

<TABLE>
<CAPTION>
Years ended December 31

1994 1993 1992

<S> <C> <C> <C>
Cash flows from operating activities:
Net income $15,280 $8,158 $12,891

Adjustments to reconcile net income
to net cash provided by operating
activities:
Non-cash revenues, expenses, gains
and losses included in income:
Change in insurance reserves 88,718 40,597 13,260
Change in premiums and insurance
balances
receivable and payable - net 11,668 (154) 604
Change in reinsurance assets 5,553 4,201 9,824
Change in deferred policy
acquisition costs (14,906) (462) 3,584
Change in investment income
due and accrued (82,023) (14,070) 3,989
Realized capital gains (1,953) (9,280) (9,432)
Change in current and deferred
income taxes (16,739) (18,513) (8,658)
Change in reserves for commissions,
expense 23,055 5,406 506
Change in other assets and
liabilities - n (2,479) (1,061) (4,018)
Total adjustments 10,894 6,664 9,659
Net cash provided by operating
activities 26,174 14,822 22,550

Cash flows from investing activities:
Cost of fixed maturities, at amortized cost, - - 341,817
Cost of fixed maturities, at amortized cost,
matured or redeemed - - 82,140
Cost of fixed maturities, at market sold 19,392 61,551 -
Cost of fixed maturities, at market matured 85,628 154,564 -
Cost of equity securities sold 2,930 1,010
Realized capital gains 3,176 11,925 12,310
Purchase of fixed maturities (252,964) (304,771) (277,502)
Purchase of equity securities (2,757) (2,798)
Mortgage loans granted (53,977) (19,428) (13,899)
Repayments of mortgage loans 16,464 22,623 807

Change in policy loans (1,184,455) (150,953) (23,646)
Change in short-term investments 18,361 (93,752) 21,359
Change in other invested assets (6,652) (7,132) (2,073)
Other - net (1,309) (3,079) (2,348)
Net cash (used in) provided by
investing activities (1,356,336) (328,279) 137,177

Cash flows from financing activities:
Change in policyholders' funds on deposit1,330,841 290,443 34,320
Change in reinsurance assets - - (192,917)
Proceeds from capital contribution - 25,000 -
Net cash provided by (used in)
financing activities 1,330,841 315,443 (158,597)

Change in cash 679 1,986 1,130
Cash at beginning of year 3,689 1,703 573
Cash at end of year $4,368 $3,689 $1,703

</TABLE>

See accompanying notes to financial statements.

AIG LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

(a) Basis of Presentation: AIG Life Insurance Company (the
Company) is a wholly-owned subsidiary of American
International Group, Inc. (the Parent). The financial
statements of the Company have been prepared on the basis
of generally accepted accounting principles. Certain
accounts have been reclassified in the 1993 and 1992
financial statements to conform to their 1994
presentation. The Company also files financial
statements prepared in accordance with statutory
practices prescribed or permitted by the Insurance
Department of the State of Delaware. Financial
statements prepared in accordance with generally accepted
accounting principles differ in certain respects from the
practices prescribed or permitted by regulatory
authorities. The significant differences are: (1)
statutory financial statements do not reflect fixed
maturities available for sale, at market value; (2)
policy acquisition costs, charged against operations as
incurred for regulatory purposes, have been deferred and
are being amortized over the anticipated life of the
contracts; (3) individual life and annuity policy
reserves based on statutory requirements have been
adjusted based upon mortality, lapse and interest
assumptions applicable to these coverages, including
provisions for reasonable adverse deviations; these
assumptions reflect the Company's experience and industry
standards; (4) deferred income taxes not recognized for
regulatory purposes have been provided for temporary
differences between the bases of assets and liabilities
for financial reporting purposes and tax purposes; (5)
for regulatory purposes, future policy benefits,
policyholders' funds on deposit, policy and contract
claims and reserve for unearned premiums are presented
net of ceded reinsurance; and (6) an asset valuation
reserve and interest maintenance reserve using NAIC
formulas are set up for regulatory purposes.

(b) Investments: Fixed maturities available for sale, where
the company may not have the ability or positive intent
to hold these securities until maturity, are carried at
market value. Included in fixed maturities available for
sale are collateralized mortgage obligations (CMOs).
Premiums and discounts arising from the purchase of CMO's
are treated as yield adjustments over the estimated life.
Common and non-redeemable preferred stocks are carried at
market value. Short-term investments are carried at
cost, which approximates market.

Unrealized gains and losses from investments in equity
securities and fixed maturities available for sale are
reflected in stockholders' equity, net of any related
deferred income taxes.

Realized capital gains and losses are determined by
specific identification. Where declines in values of
securities below cost or amortized cost are considered to
be other than temporary, a charge would be reflected in
income for the difference between amortized cost and
estimated net realizable value.

(b) Investments:

Mortgage loans on real estate are carried at unpaid
principal balance less unamortized loan origination fees
and costs less an allowance for uncollectible loans.

Real estate is carried at depreciated cost and is
depreciated on a straight-line basis over 31.5 years.
Expenditures for maintenance and repairs are charged to
income as incurred; expenditures for betterments are
capitalized and depreciated.

Policy loans are carried at the aggregate unpaid
principal balance.

Other invested assets consist primarily of limited
partnership interests which are carried at market value.
Unrealized gains and losses from the revaluation of these
investments are reflected in stockholders' equity, net of
any related taxes. Also included in this category is an
interest rate cap agreement, which is carried at its
unamortized cost. The cost of the cap is being amortized
against investment income on a straight line basis over
the life of the cap.

(c) Income Taxes: The Company joins in a consolidated federal
income tax return with the Parent and its domestic
subsidiaries. The Company and the Parent have a written
tax allocation agreement whereby the Parent agrees not to
charge the Company a greater portion of the consolidated
tax liability than would have been paid by the Company if
it had filed a separate return. Additionally, the Parent
agrees to reimburse the Company for any tax benefits
arising out of its net losses within ninety days after
the filing of that consolidated tax return for the year
in which these losses are utilized. Deferred federal
income taxes are provided for temporary differences
related to the expected future tax consequences of events

that have been recognized in the Company's financial
statements or tax returns.

(d) Premium Recognition and Related Benefits and Expenses:
Premiums on traditional life insurance and life
contingent annuity contracts are recognized when due.
Revenues for universal life and investment-type products
consist of policy charges for the cost of insurance,
administration, and surrenders during the period.
Premiums on accident and health insurance are reported as
earned over the contract term. The portion of accident
and health premiums which is not earned at the end of a
reporting period is recorded as unearned premiums.
Estimates of premiums due but not yet collected are
accrued. Benefits and expenses are associated with
earned premiums on long-duration contracts so as to
result in a level recognition of profits over the
anticipated life of the contracts.

(d) Premium Recognition and Related Benefits and Expenses:

Policy acquisition costs for traditional life insurance
products are generally deferred and amortized over the
premium paying period of the policy. Deferred policy
acquisition costs and policy initiation costs related to
universal life and investment-type products are amortized
in relation to expected gross profits over the life of
the policies (see Note 3).

The liability for future policy benefits and
policyholders' contract deposits is established using
assumptions described in Note 4.

(e) Policy and Contract Claims: Policy and contract claims
include amounts representing: (1) the actual in-force
amounts for reported life claims and an estimate of
incurred but unreported claims; and (2) an estimate,
based upon prior experience, for accident and health
reported and incurred but unreported losses. The methods
of making such estimates and establishing the resulting
reserves are continually reviewed and updated and any
adjustments resulting therefrom are reflected in income
currently.

(f) Separate and Variable Accounts: These accounts represent
funds for which investment income and investment gains
and losses accrue directly to the policyholders. Each
account has specific investment objectives, and the
assets are carried at market value. The assets of each
account are legally segregated and are not subject to
claims which arise out of any other business of the
Company.

(g) Reinsurance Assets: Reinsurance assets include the
balances due from both reinsurance and insurance
companies under the terms of the Company's reinsurance
arrangements for ceded unearned premiums, future policy
benefits for life and accident and health insurance
contracts, policyholders' funds on deposit and policy and
contract claims. It also includes funds held under
reinsurance treaties.

(h) Accounting Standards:

(i) Standards Adopted in 1994:

In November of 1992, FASB issued Statement of Financial
Accounting Standards No. 112 "Employers' Accounting for
Postemployment Benefits" (FASB 112). FASB 112
established accounting standards for employers who
provide benefits to former or inactive employees after
employment but before retirement. FASB 112 was adopted
effective January 1, 1994, and had no significant effect
on the Company's results of operations, financial
condition or liquidity.

In May 1993, FASB issued Statement of Financial
Accounting Standards No. 114 "Accounting by Creditors
for Impairment of a Loan" (FASB 114). FASB 114 addresses
the accounting by all creditors for impairment of certain
loans. The impaired loans are to be measured at the
present value of all expected future cash flows. The
present value may be determined by discounting the
expected future cash flows at the loan's effective rate
or valued at the loan's observable market price or valued
at the fair value of the collateral if the loan is
collateral dependent.

In October 1994, FASB issued Statement of Financial
Accounting Standards No. 118 "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures"
(FASB 118). FASB 118 amends FASB 114 to allow a creditor
to use existing methods to recognize interest income on
an impaired loan. FASB 118 also amends certain
disclosure requirements of FASB 114. The Company adopted
FASB 114 and 118 effective December 31, 1994. The
adoption of these statements did not cause any
significant impact on the Company's results of
operations, financial condition or liquidity.

In October 1994, FASB issued Statement of Financial
Accounting Standards No. 119 "Disclosure about Derivative
Financial Instruments and Fair Value of Financial
Instruments" (FASB 119). FASB 119 requires disclosure
about derivative financial instruments and amends FASB

Statement No. 105 "Disclosure of Information about
Financial Instruments with Off-Balance Sheet Risk and
Financial Instruments with Concentrations of Credit Risk"
(FASB 105) and FASB Statement No. 107 "Disclosure about
Fair Value of Financial Instruments".

FASB 119 requires disclosure about the amounts, nature
and terms of derivatives that are not subject to FASB
105. Also, FASB 119 requires disclosure about financial
instruments held or issued for trading purposes and
purposes other than trading. This statement was adopted
by the Company effective December 31, 1994.

(ii) Standards Adopted Prior to 1994:

In 1990, FASB issued Statement of Financial Accounting
Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (FASB 106).
FASB 106 establishes accounting for postretirement
benefits, principally postretirement health care and life
insurance benefits. It requires accrual accounting for
postretirement benefits during the years that an employee
renders services. FASB 106 has been adopted by the
Parent effective January 1, 1992. The transition
liability was recognized by the Parent immediately at
adoption as a change in accounting principle. The
transition liability and the cumulative effect of this
accounting change was not computed on a subsidiary basis,
but rather on a consolidated basis for all subsidiaries
of the Parent, and therefore, are not presented herein.

(ii) Standards Adopted Prior to 1994:

In 1992, FASB issued Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" (FASB
109). FASB 109's objectives are to recognize (a) the
amount of taxes payable or refundable for the current
year and (b) deferred tax liabilities and assets for
expected future tax consequences of events that have been
recognized in the financial statements or tax returns.
The measurement of a deferred tax asset is subject to the
expectation of future realization. The Company adopted
FASB 109, effective January 1, 1992. The cumulative
effect of adopting FASB 109 was a benefit of $5,944,000.

At January 1, 1993, the Company adopted Statement of
Accounting Standards No. 113 "Accounting and Reporting
for Reinsurance of Short-Duration and Long-Duration
Contracts" (FASB 113). This statement specifies the
accounting for the reinsuring (ceding) of insurance
contracts and eliminates the reporting of assets and
liabilities net of the effects of reinsurance. As
required by FASB 113, the reserves unearned premiums and
future policy benefits for life and accident and health
insurance contracts have been presented gross of ceded
reinsurance. A reinsurance asset was established to
include the aforementioned ceded reinsurance balances.
FASB 113 also establishes the conditions required for a

contract with a reinsurer to be accounted for as
reinsurance ceded and prescribes accounting and reporting
standards for the contracts. There has been no effect on
operating income upon adoption of FASB 113.

In May 1993, the Financial Accounting Standards Board
(FASB) issued Statement of Accounting Standards No. 115
"Accounting for Certain Investments on Debt and Equity
Securities" (FASB 115) and the Company adopted this
standard at December 31, 1993. The pretax increase in
carrying value of fixed maturities available for sale as
a result of marking to market was $108,623,000. A
portion was recorded as a component of future policy
benefits. Thus, the unrealized appreciation of
investments increased $40,054,000, net of taxes of
$21,568,000.

FASB 115 addresses the accounting and reporting for
investments in equity securities that have readily
determinable fair values and for all investments in debt
securities. Those investments are to be classified in
three categories and accounted for as follows:

Where an enterprise has the positive intent and ability
to hold debt securities to maturity, those securities are
deemed to be held to maturity securities and reported at
amortized cost.

Where an enterprise purchases debt and equity securities
principally for the purpose of selling them in the near
term, those securities are deemed to be trading
securities and are reported at fair value, with the
unrealized gains and losses included in operating income.

(ii) Standards Adopted Prior to 1994:

Where debt and equity securities are not reported either
as held to maturity or trading securities, those
securities are deemed to be available for sale securities
and reported at fair value, with unrealized gains and
losses excluded from operating income and reported in a
separate component of stockholders' equity.

This statement has significantly changed and narrowed the
meaning of the held to maturity category from previous
generally accepted accounting principles.

2. Investment Information

(a) Statutory Deposits: Securities with a carrying value of
$2,436,000 and $1,882,000 were deposited by the Company
under requirements of regulatory authorities as of
December 31, 1994 and 1993, respectively.

(b) Net Investment Income: An analysis of net investment
income is as follows (in thousands):

<TABLE>
<CAPTION>
Years ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Fixed maturities $109,826 $105,333 $105,751
Equity securities 241 52 128
Mortgage loans 14,655 13,289 13,655
Real estate 765 875 529
Policy loans 108,453 16,504 2,727
Cash and short-term investments 1,679 1,112 1,041
Other invested assets 4,070 3,384 1,723
Total investment income 239,689 140,549 125,554

Investment expenses 790 3,441 1,553
Net investment income $238,899 $137,108 $124,001
</TABLE>

2. Investment Information - (continued)

(c) Investment Gains and Losses: The net realized capital
gains (losses) and change in unrealized appreciation
(depreciation) of investments for 1994, 1993 and 1992 are
summarized below (in thousands):

<TABLE>
<CAPTION>
Years ended December 31,

1994 1993 1992
<S> <C> <C> <C>
Net realized gains (losses)
on investments:
Fixed maturities $ (10) $ 7,842 $ 10,673
Equity securities 442 (2,768) 40
Mortgage loans (1,223) (2,645) (2,878)
Other invested assets 2,744 6,851 1,597
Net realized gains $ 1,953 $ 9,280 $ 9,432
Net realized gains $ 1,953 $ 9,280 $ 9,432

Change in unrealized (depreciation)
appreciation of investments:
Fixed maturities ($90,779) $ - $ -
Equity securities 293 (59) 166
Other invested assets 5,589 - -
Separate account (7) (1) (297)
Cumulative effect of accounting
change - 61,623 -
Net change in unrealized
(depreciation) appreciation
of investments ($84,904) $61,563 $ (131)
</TABLE>

Proceeds from the sale of investments in fixed maturities
during 1994, 1993 and 1992 were $17,173,000, $60,715,000,
and $148,868,000, respectively.

During 1994, 1993 and 1992, gross gains of $394,000,
$15,363,000, and $16,450,000, respectively, and gross
losses of $404,000, $7,520,000, and $5,777,000,
respectively, were realized on dispositions of fixed
maturity investments.

During 1994, 1993 and 1992, gross gains of $442,000.
$161,000, and $50,000, respectively, and gross losses of
$0, $2,929,000 and $10,000, respectively, were realized
on disposition of equity securities.

2. Investment Information - (continued)

(d) Market Value of Fixed Maturities and Unrealized
Appreciation of Investments: At December 31, 1994 and
1993, unrealized appreciation of investments in equity
securities (before applicable taxes) included gross gains
of $793,000 and $498,000 and gross losses of $349,000 and
$348,000, respectively.

The amortized cost and estimated market values of
investments in fixed maturities at December 31, 1994 and
1993 are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
1994 Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Fixed maturities:
U.S. Government and government
agencies and authorities $ 44,107 $ 1,588 $ 1,184 $44,511
States, municipalities and
political subdivisions 341,338 5,799 20,614 326,523
Foreign governments 15,431 683 956 15,158
All other corporate 936,844 20,536 35,008 922,372

Total fixed maturities $1,337,720 $28,606 $ 57,762 $1,308,564

Gross Gross
1993 Amortized Unrealized Unrealized Market
Cost Gains Losses Value

Fixed maturities:
U.S. Government and government
agencies and authorities $ 35,939 $ 7,527 $ 62 $ 43,404
States, municipalities and
political subdivisions 316,406 26,915 237 343,084
Foreign governments 15,566 2,216 140 17,642
All other corporate 814,860 74,202 1,798 887,264

Total fixed maturities $1,182,771 $110,860 $ 2,237 $1,291,394
</TABLE>

The amortized cost and estimated market value of fixed
maturities, available for sale at December 31, 1994, by
contractual maturity, are shown below (in thousands). Actual
maturities could differ from contractual maturities because
borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

2. Investment Information - (continued)

<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
<S> <C> <C>
Due in one year or less $ 33,706 $ 32,971
Due after one year through five years 267,664 261,830
Due after five years through ten years 476,725 466,335
Due after ten years 559,625 547,428

$1,337,720 $1,308,564
</TABLE>

(e) CMO's: CMO's are U.S. government and government agency
backed and triple A-rated securities. In the preceding
table, CMO's are included in other corporate fixed
maturities. At December 31, 1994 and 1993, the market
value of the CMO portfolio was $419,148,000 and
$442,316,000, respectively; the estimated amortized cost
was approximately $427,409,000 in 1994 and $411,205,000
in 1993. The Company's CMO portfolio is readily
marketable. There were no derivative (high risk) CMO
securities contained in the portfolio at December 31,
1994.

(f) Fixed Maturities Below Investment Grade: At December 31,
1994 and 1993, the fixed maturities held by the Company
that were below investment grade had an aggregate
amortized cost of $65,604,000 and $59,324,000,
respectively, and an aggregate market value of
$61,946,000 and $60,284,000, respectively.

(g) Non-income Producing Assets: Non-income producing assets
during the year were insignificant.

(h) Investments Greater than 10% Equity: The market value of
investments in the following companies and institutions
exceeded 10% of the Company's total stockholder's equity
at December 31, 1994 (in thousands):

Fixed Maturities:
Morgan Stanley Group, Incorporated $ 35,299
Standard Credit Card 27,873
Beneficial Corporation 22,832
GTE Corporation 19,875

Other Invested Assets:
Equity Linked Investors, L.P. $ 26,557
Equity Linked Investors II, L.P. 35,805

3. Deferred Policy Acquisition Costs

The following reflects the policy acquisition costs
deferred (commissions, direct solicitation and other
costs) which will be amortized against future income and
the related current amortization charged to income,
excluding certain amounts deferred and amortized in the
same period (in thousands):
<TABLE>
<CAPTION>
Years ended December 31,

1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year $39,568 $39,106 $42,690
Acquisition costs deferred 29,442 6,465 2,035
Amortization charged to income (14,536) (6,003) (5,619)
Balance at end of year $54,474 $39,568 $39,106
</TABLE>

4. Future Policy Benefits and Policyholders' Funds on
Deposit

(a) The analysis of the future policy benefits and
policyholders' funds on deposit at December 31, 1994 and
1993 follows (in thousands):

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Future Policy Benefits:
Long duration contracts $ 476,173 $ 512,654
Short duration contracts 7,038 6,464
$ 483,211 $ 519,118

Policyholders' funds on deposit:
Annuities $ 868,828 $ 802,081
Universal life 110,376 98,494
Guaranteed investment contracts (GICs) 57,457 40,187
Corporate owned life insurance 1,483,882 195,610
Other investment contracts 4,487 4,054
</TABLE> $2,525,030 $1,140,426

(b) Long duration contract liabilities included in future
policy benefits, as presented in the table above, result
from traditional life products. Short duration contract
liabilities are primarily accident and health products.
These long duration products generally have fixed cash
values and there are no surrender charges. The liability
for future policy benefits has been established based
upon the following assumptions:

4. Future Policy Benefits and Policyholders' Funds on
Deposit (continued)

(i) Interest rates for traditional life insurance products
are 9.5 percent graded to 7.0 percent over 30 years. The
liability for future policy benefits for universal life
insurance has been established using FASB 97 and assumes
a 1.0 percent investment margin. Interest rates
(exclusive of immediate/terminal funding annuities),
which vary by year of issuance and products, range from
3.0 percent to 12.0 percent. Interest rates on
immediate/terminal funding annuities are at a maximum of
12.2 percent and grade to not greater than 7.5 percent.

(ii) Mortality and withdrawal rates are based upon actual
experience modified to allow for variations in policy
form. The weighted average lapse rate, including
surrenders, for individual life approximated 3.0
percent.

(i) Interest rates credited on deferred annuities vary by
year of issuance and range from 8.2 percent to 4.0
percent. Credited interest rate guarantees are
generally for a period of one year. Withdrawal charges
generally range from 6.0 percent to 10.0 percent grading
to 0 percent over a period of 7 to 10 years.

(ii) GICs have market value withdrawal provisions for any
funds withdrawn other than benefit responsive payments.
Interest rates credited generally range from 4.7 percent
to 9.1 percent and maturities range from 2 to 7 years.

(iii) Interest rates on corporate-owned life insurance
business are guaranteed at 4.0 percent and credited on
average 9.7 percent on funds supported by policy loans.

(iv) The universal life funds, exclusive of corporate owned
life insurance business, have credited interest rates of
6.0 percent to 7.0 percent and guarantees ranging from
4.0 percent to 5.5 percent depending on the year of
issue. Additionally, universal life funds are subject
to surrender charges that amount to 7.5 percent of the
fund balance and grade off over no more than 15 years
from issue.

5. Income Taxes

(a) The Federal income tax rate applicable to ordinary
income is 35% for 1994 and 1993 and 34% for 1992.
Actual tax expense on income from operations differs
from the "expected" amount computed by applying the
Federal income tax rate because of the following (in
thousands except percentages):
<TABLE>
<CAPTION>
Years ended December 31,
1994 1993 1992
Percent Percent Percent
of of of
pre-tax pre-tax pre-tax
operating operating operating
Amount Income Amount Income Amount Income
<S> <C> <C> <C> <C> <C> <C>
"Expected" income tax
expense $ 8,327 35.0% $ 3,707 35.0% $ 3,466 34.0%
Prior year federal
income tax benefit - - (1,404) (13.2) - -
State income tax 149 0.6 - - -
Other 35 0.2 131 1.2 (218) (2.2)
Actual income tax expense $ 8,511 35.8% $ 2,434 23.0% $ 3,248 31.8%
</TABLE>
(b) The components of the net deferred tax liability were as
follows (in thousands):
<TABLE>
<CAPTION>
Years ended December 31,
1994 1993
<S> <C> <C>
Deferred tax assets:
Adjustment to life reserves $ 17,703 $ 1,190
Adjustments to mortgage loans and
investment income 2,395 1,961
Unrealized depreciation
on investments 8,093 -
Adjustment to policy and
contract claims 8,200 479
Other 521 440
36,912 4,070
Deferred tax liabilities:
Deferred policy acquisition costs $ 10,275 $ 4,682
Unrealized appreciation
on investments - 21,624
Bond discount 1,906 2,059
Other 352 490
12,533 28,855
Net deferred tax (asset) liability $ (24,379) $ 24,785
</TABLE>

5. Income Taxes (continued)

(c) At December 31, 1994, accumulated earnings of the
Company for Federal income tax purposes include
approximately $2,204,000 of "Policyholders' Surplus" as
defined under the Code. Under provisions of the Code,
"Policyholders' Surplus" has not been currently taxed
but would be taxed at current rates if distributed to
the Parent. There is no present intention to make cash
distributions from "Policyholders' Surplus" and
accordingly, no provision has been made for taxes on
this amount.

(d) Income taxes paid in 1994, 1993, and 1992 amounted to
$25,052,000, $17,669,000, and $2,434,000, respectively.

6. Commitments and Contingencies

The Company, in common with the insurance industry in
general, is subject to litigation, including claims for
punitive damages, in the normal course of their
business. The Company does not believe that such
litigation will have a material effect on its operating
results and financial condition.

7. Fair Value of Financial Instruments

(a) Financial Accounting Standards Board Statement No. 107
"Disclosures about Fair Value of Financial Instruments"
(FASB 107) requires disclosure of fair value information
about financial instruments for which it is practicable
to estimate such fair value. These financial
instruments may or may not be recognized in the balance
sheet. In the measurement of the fair value of certain
of the financial instruments, quoted market prices were
not available and other valuation techniques were
utilized. These derived fair value estimates are
significantly affected by the assumptions used. FASB
107 excludes certain financial instruments, including
those related to insurance contracts.

The following methods and assumptions were used by the
Company in estimating the fair value of the financial
instruments presented:

Cash and short term investments: The carrying amounts
reported in the balance sheet for these instruments
approximate fair values.

7. Fair Value of Financial Instruments (continued)

Fixed maturities: Fair values for fixed maturity
securities carried at amortized cost or at market value
are based upon quoted market prices. For certain fixed
maturities for which market prices were not readily
available, fair values were estimated using values
obtained from independent pricing services.

Equity securities: Fair values for equity securities
were based upon quoted market prices.

Mortgage and policy loans: Where practical, the fair
values of loans on real estate were estimated using
discounted cash flow calculations based upon the
Company's current incremental lending rates for similar
type loans. The fair value of the policy loans were not
calculated as the Company believes it would have to
expend excessive costs for the benefits derived.
Therefore, the fair value of policy loans was estimated
at carrying value.

Interest rate cap: Fair values for the interest rate
cap were estimated using values obtained from an
independent pricing service.

Policyholders' funds on deposit: Fair value of
policyholder contract deposits were estimated using
discounted cash flow calculations based upon current
interest rates on investments with maturities consistent
with those remaining for the contracts being valued.

(b) The fair value and carrying amounts of financial
instruments is as follows (in thousands):

7. Fair Value of Financial Instruments (continued)

<TABLE>
<CAPTION>
1994 Fair Carrying
Value Amount
<S> <C> <C>
Cash and short-term investments $ 91,488 $ 91,488
Fixed maturities 1,308,564 1,308,564
Equity securities 4,113 4,113
Mortgage and policy loans 1,551,831 1,549,601
Interest rate cap 522 245

Policyholders' funds on deposit $ 2,524,273$ 2,525,030

1993 Fair Carrying
Value Amount

Cash and short-term investments $ 109,170$ 109,170
Fixed maturities 1,291,394 1,291,394
Equity securities 3,820 3,820
Mortgage and policy loans 340,344 328,804
Interest rate cap 188 321

Policyholders' funds on deposit $ 1,161,954$ 1,140,426
</TABLE>

8. Stockholders' Equity

(a) The maximum stockholder dividend which can be paid
without prior regulatory approval is subject to
restrictions relating to statutory surplus and statutory
net gain from operations. These restrictions limited
payment of dividends to $10,560,000 during 1994,
however, no dividends were paid during the year.

(b) The Company's stockholders' equity as determined in
accordance with statutory accounting practices was
$145,209,000 at December 31, 1994 and $101,655,000 at
December 31, 1993. Statutory net income amounted to
$47,002,000, $10,441,000, and $1,186,000 for 1994, 1993
and 1992, respectively.

9. Employee Benefits

(a) The Company participates with its affiliates in a non-
contributory defined benefit pension plan which is
administered by the Parent. All qualified employees who
have attained age 21 and completed six months of
continuous service are eligible to participate in this
plan. An employee with 5 or more years of service is
entitled to pension benefits beginning at normal
retirement age 65. Benefits are based upon a percentage
of average final compensation multiplied by years of
credited service commencing April 1, 1985 and limited to
44 years of credited service. The average final
compensation is subject to certain limitations. Annual
funding requirements are determined based on the
"projected unit credit" cost method which attributes a
pro rata portion of the total projected benefit payable
at normal retirement to each year of credited service.
Pension expense for current service costs, retirement
and termination benefits for the years ended December
31, 1994, 1993 and 1992 were approximately $179,000,
$248,000, and $177,000, respectively. The Parent's
plans do not separately identify projected benefit
obligations and plan assets attributable to employees of
participating affiliates. The projected benefit
obligations exceeded the plan assets at December 31,
1994 by $21,375,000.

(b) The Parent also sponsors a voluntary savings plan for
domestic employees (a 401(k) plan), which provides for
salary reduction contributions by employees and matching
contributions by the Parent up to two percent of annual
salary.

(c) In addition to providing pension benefits, the Parent
and its subsidiaries provide a post-retirement benefit
program for medical care and life insurance.
Eligibility in the various plans is generally based upon
completion of a specified period of eligible service and
reaching a specified age.

(d) Employees of the Company participate in certain stock
option and stock purchase plans of the Parent. In
general, under the stock option plans, officers and
other key employees are granted options to purchase AIG
common stock at a price not less than fair market value
at the date of grant. In general, the stock purchase
plans provide for eligible employees to receive
privileges to purchase AIG common stock at a price equal
to 85% of the fair market value on the date of grant of
the purchase privilege.

10. Reinsurance

(a) The Company reinsures portions of its life and accident
and health insurance risks with unaffiliated companies.
Life insurance risks are reinsured primarily under
coinsurance and yearly renewable term treaties.
Accident and health insurance risks are reinsured
primarily under coinsurance, excess of loss and quota
share treaties. Amounts recoverable from reinsurers are
estimated in a manner consistent with the assumptions
used for the underlying policy benefits and are
presented as a component of reinsurance assets. A
contingent liability exists with respect to reinsurance
ceded to the extent that any reinsurer is unable to meet
the obligations assumed under the reinsurance
agreements.

The Company also reinsures portions of its life and
accident and health insurance risks with affiliated
companies (see Note 11). The effect of all reinsurance
contracts, including reinsurance assumed, is as follows
(in thousands, except percentages):
<TABLE>
<CAPTION>
Percentage
of Amount
December 31, 1994 Assumed
Gross Ceded Assumed Net to Net
<S> <C> <C> <C> <C> <C>
Life Insurance in Force $38,375,181 $16,500,870 $19,298 $21,893,609 0.1%

Premiums:
Life 130,716 7,233 (10) 123,473 -
Accident and Health 66,026 13,949 79,810 131,887 60.5%
Annuity 10,630 - - 10,630 -

Total Premiums $ 207,372 $ 21,182 $79,800 $ 265,990 30.0%
Percentage
of Amount
December 31, 1993 Assumed
Gross Ceded Assumed Net to Net

Life Insurance in Force $12,101,258 $1,824,238 $57,697 $10,334,717 0.6%

Premiums:
Life 54,475 6,115 604 48,964 1.2%
Accident and Health 59,363 14,777 69,388 113,974 60.9%
Annuity 4,985 48 672 5,609 12.0%

Total Premiums $ 118,823 $ 20,940 $70,664 $ 168,547 41.9%
</TABLE>

10. Reinsurance (continued)

<TABLE>
<CAPTION>
Percentage
of Amount
December 31, 1992 Assumed
Gross Ceded Assumed Net to Net
<S> <C> <C> <C> <C> <C>
Life Insurance in Force $ 8,497,628 $1,896,283 $821,395 $7,422,740 11.1%

Premiums:
Life 37,040 7,380 819 30,479 2.7%
Accident and Health 58,736 17,042 58,256 99,950 58.3%
Annuity 10,669 - 1,441 12,110 11.9%

Total Premiums $ 106,445 $ 24,422 $60,516 $ 142,539 42.5%
</TABLE>

(b) The maximum amount retained on any one life by the
Company is $250,000. Beginning January 1, 1995, the
maximum amount retained has been increased to $500,000.

(c) Reinsurance recoveries, which reduced death and other
benefits, approximated $34,252,000, $15,182,000, and
$15,460,000, respectively, for each of the years ended
December 31, 1994, 1993 and 1992.

The Company's reinsurance arrangements do not relieve
the Company from its direct obligation to its insureds.

11. Transactions with Related Parties

(a) The Company is party to several reinsurance agreements
with its affiliates covering certain life and accident
and health insurance risks. Premium income and
commission ceded for 1994 amounted to $1,267,000 and
$2,000, respectively. Premium income ceded to
affiliates amounted to $322,000 for the year ended
December 31, 1993. There were no commissions ceded to
affiliates in 1993. Premium income and commission ceded
for 1992 amounted to $1,445,000 and $9,000,
respectively. Premium income and ceding commission
expense assumed from affiliates aggregated $75,005,000
and $20,374,000, respectively, for 1994, compared to
$69,076,000 and $19,469,000, respectively, for 1993, and
$59,349,000 and $16,683,000, respectively for 1992.

11. Transactions with Related Parties (continued)

(b) The Company is party to several cost sharing agreements
with its affiliates. Generally, these agreements
provide for the allocation of costs upon either the
specific identification basis or a proportional cost
allocation basis which management believes to be
reasonable. For the years ended December 31, 1994, 1993
and 1992, the Company was charged $21,392,000,
$19,961,000, and $17,957,000, respectively, for expenses
attributed to the Company but incurred by affiliates.
During the same period, the Company received
reimbursements from affiliates aggregating $13,383,000,
$12,210,000, and $11,459,000, respectively, for costs
incurred by the Company but attributable to affiliates.

(c) During 1992, the Company entered into a reinsurance
agreement with Delaware American Life Insurance Company,
an affiliated insurer. As part of this agreement the
Company transferred fixed maturities of $199,836,000 to
Delaware American during 1992. At December 31, 1994 and
1993 reinsurance assets include $177,590,000 and
$189,356,000, respectively reflecting risks ceded under
this treaty.

(d) During 1993, the Company received cash surplus
contributions of $25,000,000 from AIG, Inc., the Parent
and Commerce & Industry Insurance Company.

(e) During 1993, the Company sold a mortgage loan to Atlanta
17th Street, Inc., for the aggregate unpaid principal
balance of $17,500,000.

(f) During 1993, the Company entered into a loan agreement
with AIG Investment Company (AIGIC), an affiliated
company. The purpose of the loan was to fund the
Company's investment in the separate account pension
product. At December 31, 1994 and 1993, amounts due to
related parties include $9,566,000 and $8,092,000,
respectively, reflecting the loan balance under this
agreement.

In December 1994, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position 94-5
"Disclosure of Certain Matters in the Financial Statements of
Insurance Enterprises" (SOP 94-5). Pursuant to SOP 94-5, the
Company has disclosed certain information with respect to
unpaid claims and claim adjustment expenses; accounting
methods used that are permitted by various insurance
regulatory authorities rather than prescribed by such
authorities; and the Company's policies and methodologies for

estimating the liability for unpaid claim adjustment expenses
for difficult-to-estimate liabilities.

PART C

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

a. Financial Statements

The financial statements of AIG Life Insurance
Company and are included in Part B hereof.

b. Exhibits

1. Resolution of Board of Directors of the Company
authorizing the establishment of the Variable
Account*

2. Not Applicable

3. (i) Principal Underwriter's Agreement**
(ii) Broker-Dealer Agreement**
(iii) General Agency Agreement***
(iv) Distribution Agreement***
(v) Buy-Sell Agreement #

4. Flexible Premium Variable Annuity Contracts####
Single Premium Variable Annuity Contracts##

5. Application for Annuity Contract##

6. (i) Copy of Articles of Incorporation of the
Company*
(ii) Copy of the Bylaws of the Company*

7. Not Applicable

8. Administrative Agreement* (filed confidentially)

9. Opinion of Counsel

10. (i) Consent of Counsel
(ii) Consent of Independent Accountants

11. Not Applicable

12. Agreement Governing Contribution*

13. Performance Data##

14. Powers of Attorney###

* Incorporated by reference to initial filing on Form
N-4, (File No. 33-16708) filed on October 7, 1986.

** Incorporated by reference to Post-Effective Amendment No.
3 to Form N-4 (File No. 33-16708), filed on May 1, 1989.

*** Incorporated by reference to Post-Effective Amendment No.
4 to Form N-4 (File No. 33-16708), filed on May 1, 1990.

# Incorporated by reference to Registrant's Post-Effective
Amendment No. 2 to Form N-4 (File No. 33-39171) filed on
April 30, 1992.

## Incorporated by reference to Registrant's Post-Effective
Amendment No. 3 to Form N-4 (File No. 33-39171) filed on
May 1, 1993.

### Incorporated by reference to Post-Effective Amendment No.
7 for Variable Account II on Form S-6 (File No. 33-18301)
filed on December 8, 1994.

#### Incorporated by reference to Pre-Effective Amendment
No. 1 to Form N-4 (File No. 33-58504) filed on June
11, 1993.

Item 25. Directors and Officers of the Depositor.

The following are the Officers and Directors of the
Company:

Officers:

Name and Principal Position and Offices
Business Address * with the Company

<S> <C>

Ernest E. Stempel Chairman of the Board
Robert J. O'Connell President
Michele L. Abruzzo Senior Vice President
Michael J. Mullin Vice President -Administration
Howard Gunton Vice President & Comptroller
Donald Hancock Vice President
Jeffrey Kestenbaum Senior Vice President
Robert Liguori Vice President and Counsel
Edward E. Matthews Senior Vice President - Finance
Jerome Muldowney Senior Vice President - Domestic
Investments
Nicholas A. O'Kulich Vice President & Treasurer

John Skar Vice President & Chief Actuary
Gerald W. Wyndorf Executive Vice President
Elizabeth Tuck Secretary - Corporate

*Business Address for all individuals listed is: 80 Pine
Street, New York, New York 10005

</TABLE>

Directors Address

<S> <C>

M.R. Greenberg American International Group,
Inc.
70 Pine Street
New York, New York 10270

Edwin A.G. Manton American International Group,
Inc.
70 Pine Street
New York, New York 10270

Edward E. Matthews American International Group,
Inc.
70 Pine Street
New York, New York 10270

Jerome Muldowney American International Group,
Inc.
70 Pine Street
New York, New York 10270

Win J. Neuger American International Group,
Inc.
70 Pine Street
New York, New York 10270

Robert J. O'Connell AIG Life Insurance Company
One Alico Plaza
Wilmington, Delaware 19801

Nicholas A. O'Kulich American International Group,
Inc.
70 Pine Street
New York, New York 10270

John Skar AIG Life Insurance Company
One Alico Plaza

Wilmington, DE 19801

Howard Smith American International Group,
Inc.
70 Pine Street
New York, New York 10270

Ernest E. Stempel American International Companies
70 Pine Street
New York, New York 10270

Gerald W. Wyndorf American International Companies
80 Pine Street
New York, New York 10005

</TABLE>

Item 26. Persons Controlled by or Under Common Control
with the Depositor or Registrant

See Chart of Ownership, Exhibit C26.

Item 27. Number of Contract Owners.
<REDLINE>
There were approximately 3,331 contractholders as of November
30,</REDLINE> 1995.

Item 28. Indemnification

Incorporated by reference to initial Form N-4 (File No.
33-9144) filed on October 7, 1986, by American International
Life Assurance Company of New York, an affiliate of
Registrant.

Item 29. Principal Underwriter

a. AIG Equity Sales Corp. also acts as the principal
underwriter for other separate accounts of the Depositor,
as well as the separate accounts of American
International Life Assurance Company of New York, an
affiliated company.

b. The following information is provided for each director
and officer of the Principal Underwriter:

Name and Principal Positions and Offices
Business Address* with Underwriter

<S> <C>

Michele L. Abruzzo Director and President
Kevin Clowe Director and Vice President
Edward E. Matthews Director and Chairman of the
Board
Florence Davis Director and General Counsel
Jerome T. Muldowney Director
Robert J. O'Connell Director
Ernest E. Stempel Director
Philomena Scamardella Vice President and Senior
Compliance Officer
Daniel K. Kingsbury Vice President
Kenneth F. Judkowitz Treasurer and Comptroller
Julia Perlman Director of Marketing
Elizabeth M. Tuck Secretary <REDLINE>
Karen F. McDonald</REDLINE> Assistant Secretary

*Business address is: 80 Pine Street, New York, New York
10270.

</TABLE>

Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions
Compensation

AIG Equity
Sales Corp. $2,647,001 $0 $0 $0

</TABLE>

Item 30. Location of Accounts and Records.
<REDLINE>
Kenneth F. Judkowitz, Treasurer and Comptroller of AIG
Equity Sales Corp., whose address is 80 Pine Street, New York,
New York 10005, maintains physical possession of the
accounts, books or documents of the Variable Account required
to be maintained by Section 31(a) of Investment Act of 1940
and the rules promulgated thereunder.<REDLINE>

Item 31. Management Services.

Not Applicable

Item 32. Undertakings.

a. Registrant hereby undertakes to file a
post-effective amendment to this registration
statement as frequently as is necessary to ensure
that the audited financial statements in the
registration statement are never more than sixteen
(16) months old for so long as payments under the
variable annuity contracts may be accepted.

b. Registrant hereby undertakes to include either (1)
as part of any application to purchase a Contract
offered by the Prospectus, a space that an applicant
can check to request a Statement of Additional
Information, or (2) a postcard or similar written
communication affixed to or included in the
Prospectus that the applicant can remove to send for
a Statement of Additional Information.

c. Registrant hereby undertakes to deliver any
Statement of Additional Information and any
financial statements required to be made available
under this Form promptly upon written or oral
request.

d. Registrant represents that in connection with 403(b)
Plans, it is relying on the November 28, 1988
no-action letter issued by the SEC to the American
Council of Life Insurance.

e. Registrant represents that Variable Account I meets
the definition of a separate account under the
federal securities laws.

SIGNATURES

As required by the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets
the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement and has caused
this Registration Statement to be signed on its behalf, in the
City of Wilmington, and State of Delaware on this 27th day of
December, 1995.

Variable Account I
Registrant

By: /s/ James A. Bambrick

James A. Bambrick, Vice
President

By: AIG Life Insurance Company

Depositor

By: /s/ James A. Bambrick

James A. Bambrick
Vice President

As required by the Securities Act of 1933, this registration
statement has been signed by the following persons in the
capacities and on the date indicated.

Name Title Date

M.R. Greenberg* Director December 27, 1995
M.R. Greenberg

Howard Gunton* Chief Accounting December 27, 1995
Howard Gunton Officer

Robert J. O'Connell* Director December 27, 1995
Robert J. O'Connell

Nicholas A. O'Kulich* Director, Treasurer December 27, 1995
Nicholas A. O'Kulich and Chief Financial
Officer

Edwin A.G. Manton* Director December 27, 1995
Edwin A.G. Manton

Edward E. Matthews* Director December 27, 1995
Edward E. Matthews

Jerome Muldowney* Director December 27, 1995
Jerome Muldowney

___________ Director December 27, 1995
Win J. Neuger

John Skar* Director December 27, 1995
John Skar

Howard Smith* Director December 27, 1995
Howard Smith

Ernest E. Stempel* Director December 27, 1995
Ernest E. Stempel Chairman of the Board

________________ Director December 27, 1995
Gerald W. Wyndorf Executive Vice President

*By: /s/ James A. Bambrick
James A. Bambrick
Attorney in Fact

EXHIBITS TO

AMENDMENT NUMBER 4 TO
FORM N-4

FOR VARIABLE

ACCOUNT I

INDEX TO EXHIBITS

</TABLE>
<TABLE>
<CAPTION>

Exhibit Page

9 Opinion of Counsel

10 (i) Consent of Counsel
10 (ii) Consent of Independent Accountants

</TABLE>

EXHIBIT 9

Opinion of Counsel
<PAGE>

OPINION OF COUNSEL

I have made such examination of the law and have examined such records and
documents as in my judgment are necessary or appropriate to enable me to
render the opinions expressed below.

I am of the following opinions:

1. AIG Life Insurance Company is a valid and existing stock life
insurance company domiciled in the State of Delaware.

2. Variable Account I is a separate investment account of AIG Life
Insurance Company validly existing pursuant to the Delaware
Insurance Laws and the Regulations thereunder.

3. All of the prescribed corporate procedures for the issuance of
the Group & Individual Flexible Premium Deferred Variable
Annuity Contracts (the "Contracts") have been followed, and,
when such Contracts are issued in accordance with the
Prospectus contained in the Registration Statement, all state
requirements relating to such Contracts will have been complied
with.

4. Upon the acceptance of purchase payments made by Contract
Owners pursuant to a Contract issued in accordance with the
Prospectus contained in the Registration Statement and upon
compliance with applicable law, such Contract Owner will have a
legally-issued, fully paid, nonassessable interest in such
Contract.

This opinion, or a copy hereof, may be used as an exhibit to or in
connection with the filing with the Securities and Exchange Commission of
the Registration Statement on Form N-4 for the Contracts to be issued by
AIG Life Insurance Company and its separate account, Variable Account I.

/s/ Kenneth D. Walma
Kenneth D. Walma
Assistant Secretary and Senior Attorney

Dated: December 27, 1995
<PAGE>

EXHIBIT 10(i)
Consent of Counsel
<PAGE>

Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400-E
Washington, D.C. 20007

December 27, 1995

AIG Life Insurance Company
One Alico Plaza
P.O. Box 667
Wilmington, Delaware 19899

Gentlemen:

We hereby consent to the reference to our name under the caption
"Legal Counsel" in the Statement of Additional contained in Post-Effective
Amendment No. 4 to the Registration Statement on Form N-4 (File No. 33-
58504) filed by AIG Life Insurance Company and Variable Account I with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940.

Very truly yours,

/s/Jorden Burt Berenson & Johnson LLP
Jorden Burt Berenson & Johnson LLP
<PAGE>

EXHIBIT 10(ii)
Consent of Independent Accountants
<PAGE>

Coopers & Lybrand L.L.P.
(Letterhead)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the following with respect to Post-effective Amendment
No. 4 to the Registration Statement (No. 33-58504) on Form N-4 under the
Securities Act of 1933 of Variable Account I of AIG Life Insurance Company.

1. The inclusion of our report dated February 22, 1995 relating to
our audits of the financial statements of AIG Life Insurance
Company in the Statement of Additional Information.

2. The inclusion of our report dated February 13, 1995 relating to
our audits of the financial statements of Variable Account I in
the Statement of Additional Information.

3. The incorporation by reference into the Prospectus of our
report dated February 22, 1995 relating to our audits of the
financial statements of AIG Life Insurance Company and our
report dated February 13, 1995 relating to our audits of the
financial statements of Variable Account I.

4. The reference to our firm under the heading "General
Information - Independent Accountants" in the Statement of
Additional Information.

/s/Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 22, 1995
<PAGE>