AIG Life Insurance Company
---------------------------------------
VARIABLE ACCOUNT I
ANNUAL REPORT
-------------------------
DECEMBER 31, 1995
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
Shares Cost
----------- -----------
<S> <C> <C> <C>
Assets:
Investments at Market Value:
Delaware Group Premium Fund:
Equity/Income Series .............................. 1,623,822.957 ............. $17,639,670 ............. $24,081,269
High Yield Series ................................. 533,345.424 ............. 4,712,264 ............. 4,768,063
Capital Reserves Series ........................... 214,867.209 ............. 2,155,400 ............. 2,133,631
Multiple Strategy Series .......................... 484,678.760 ............. 6,161,035 ............. 7,512,415
Money Market Series ............................... 249,116.300 ............. 2,491,163 ............. 2,491,163
Growth Series ..................................... 123,359.200 ............. 1,501,324 ............. 1,866,424
-----------
Total Investments ......................................................... $34,660,856 ............. 42,852,965
Dividends Receivable ......................................................................................... 58,679
Receivable from AIG Life Insurance Company ................................................................... 23,651
-----------
Total Assets ........................................................................................... $42,935,295
===========
Equity:
Contract Owners' Equity ...................................................................................... $42,935,295
-----------
Total Liabilities and Equity ........................................................................... $42,935,295
===========
</TABLE>
See Notes to Financial Statements
1
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market Growth
Total Series Series Series Series Series Series
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income (Loss):
Dividends ............................... $2,202,553 $1,114,945 $ 528,294 $ 139,199 $ 242,803 $165,968 $ 11,344
Expenses:
Mortality & Expense Risk Fees ........... 521,699 279,502 67,129 26,293 88,915 38,763 21,097
Daily Administrative Charges ............ 2,044 590 594 101 331 108 320
---------- ---------- --------- --------- ---------- -------- ---------
523,743 280,092 67,723 26,394 89,246 38,871 21,417
---------- ---------- --------- --------- ---------- -------- ---------
Net Investment Income (Loss) .......... 1,678,810 834,853 460,571 112,805 153,557 127,097 (10,073)
---------- ---------- --------- --------- ---------- -------- ---------
Realized and Unrealized Gain (Loss)
on Investments:
Realized Gain (Loss) on Investment
Activity .............................. 1,102,469 1,135,086 (216,760) (63,513) 189,644 -- 58,012
Change in Unrealized Appreciation
(Depreciation) ......................... 6,951,188 4,630,083 470,600 199,418 1,294,244 -- 356,843
---------- ---------- --------- --------- ---------- -------- ---------
Net Gain (Loss) on Investments ...... 8,053,657 5,765,169 253,840 135,905 1,483,888 -- 414,855
---------- ---------- --------- --------- ---------- -------- ---------
Increase (Decrease) in Net Assets Resulting
From Operations ......................... $9,732,467 $6,600,022 $ 714,411 $ 248,710 $1,637,445 $127,097 $ 404,782
========== ========== ========= ========= ========== ======== =========
</TABLE>
See Notes to Financial Statements
2
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995
------------------------------------------------------------------------------------------------
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market Growth
Total Series Series Series Series Series Series
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase in Net Assets
Operations:
Net Investment Income (Loss) .... $ 1,678,810 $ 834,853 $ 460,571 $ 112,805 $ 153,557 $ 127,097 $ (10,073)
Realized Gain (Loss)on Investment
Activity ...................... 1,102,469 1,135,086 (216,760) (63,513) 189,644 -- 58,012
Change in Unrealized Appreciation
(Depreciation) of Investments . 6,951,188 4,630,083 470,600 199,418 1,294,244 -- 356,84
------------ ------------ ----------- ----------- ----------- ----------- -----------
Increase in Net Assets Resulting
from Operations ................. 9,732,467 6,600,022 714,411 248,710 1,637,445 127,097 404,782
------------ ------------ ----------- ----------- ----------- ----------- -----------
Capital Transactions:
Contract Deposits ............... 10,039 -- -- -- -- 10,039 --
Administrative Charges .......... (35,531) (18,944) (5,136) (1,655) (5,068) (2,456) (2,272)
Transfers Between Funds ......... 0 1,118,323 (384,910) 202,060 (4,438) (969,231) 38,196
Net Transfers From (To) AIG Life (41,836) (123,270) 60,364 34,710 339 (11,169) (2,810)
Contract Withdrawals ............ (6,598,882) (3,423,436) (765,690) (517,035) (831,564) (765,773) (295,384)
Deferred Sales Charges .......... (46,930) (20,888) (4,554) (6,247) (4,565) (5,945) (4,731)
Death Benefits .................. (605,360) (366,883) (88,482) (40,074) (11,829) (98,092) --
Capital redemptions by AIG Life . (193,538) -- -- -- (193,538) -- --
------------ ------------ ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets
Resulting from Capital
Transactions ................ (7,512,038) (2,835,098) (1,188,408) (328,241) (1,050,663) (1,842,627) (267,001)
------------ ------------ ----------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in
Net Assets ...................... 2,220,429 3,764,924 (473,997) (79,531) 586,782 (1,715,530) 137,781
Net Assets, at Beginning of Year .. 40,714,866 20,316,395 5,279,392 2,222,916 6,947,197 4,217,780 1,731,186
------------ ------------ ----------- ----------- ----------- ----------- -----------
Net Assets, at End of Year ........ $ 42,935,295 $ 24,081,319 $ 4,805,395 $ 2,143,385 $ 7,533,979 $ 2,502,250 $ 1,868,967
============ ============ =========== =========== =========== =========== ===========
<CAPTION>
1994
-----------------------------------------------------------------------------------------------
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market Growth
Total Series Series Series Series Series Series
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase in Net Assets
Operations:
Net Investment Income (Loss) .... $ 2,688,368 $ 1,652,137 $ 487,992 $ 170,418 $ 283,840 $ 107,280 $ (13,299)
Realized Gain on Investment
Activity ...................... 588,350 400,665 (47,612) (72,658) 207,436 8 100,511
Change in Unrealized Appreciation
(Depreciation) of Investments . (3,991,082) (2,372,380) (625,677) (229,323) (588,281) -- (175,421)
----------- ----------- ---------- ----------- ----------- ----------- -----------
Increase in Net Assets Resulting
from Operations ................. (714,364) (319,578) (185,297) (131,563) (97,005) 107,288 (88,209)
----------- ----------- ---------- ----------- ----------- ----------- -----------
Capital Transactions:
Contract Deposits ............... 465,512 61,446 54,487 50,000 38,275 259,804 1,500
Administrative Charges .......... (31,848) (17,379) (3,712) (1,859) (5,174) (2,321) (1,403)
Transfers Between Funds ......... -- (1,067,825) (328,171) (380,205) 37,901 1,641,456 96,844
Net Transfers From (To) AIG Life (235,708) 48,091 (84,360) (9,094) (98,370) (91,975) --
Contract Withdrawals ............ (5,167,603) (2,301,013) (453,742) (614,680) (762,744) (847,879) (187,545)
Deferred Sales Charges .......... (88,963) (43,299) (5,438) (12,486) (10,350) (14,011) (3,379)
Death Benefits .................. (382,271) (101,579) (97,619) (74,154) (73,738) (35,181) --
----------- ----------- ---------- ----------- ----------- ----------- -----------
Increase (Decrease) in Net
Assets Resulting from Capital
Transactions ................ (5,440,881) (3,421,558) (918,555) (1,042,478) (874,200) 909,893 (93,983)
----------- ----------- ---------- ----------- ----------- ----------- -----------
Total Increase (Decrease) in
Net Assets ..................... (6,155,245) (3,741,136) 1,103,852) (1,174,041) (971,205) 1,017,181 (182,192)
Net Assets, at Beginning of Year .. 46,870,111 24,057,531 6,383,244 3,396,957 7,918,402 3,200,599 1,913,378
----------- ----------- ---------- ----------- ----------- ----------- -----------
Net Assets, at End of Year ........ $40,714,866 $20,316,395 $5,279,392 $ 2,222,916 $ 6,947,197 $ 4,217,780 $ 1,731,186
=========== =========== ========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
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 Company
(the "Company"), a wholly-owned 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 (the
"contracts"). The Account invests in shares of Delaware Group Premium Fund, Inc.
(the "Fund"). The Fund consists of a series of portfolios, six in which the
contracts may invest: Equity/Income Series; High Yield Series; Capital Reserves
Series; Multiple Strategy Series; Money Market Series; and Growth Series. The
Account invests in shares of other funds which are not available to these
contracts.
The account had no assets or operations until September 17, 1987 when the
Company transferred $105,000 from its general funds to provide initial capital.
In April 1989, the Company transferred an additional $1,000,000 to purchase
shares in the Multiple Strategy Series. As of December 31, 1995, the Company has
redeemed all of its capital shares.
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
Guaranteed Account, which is part of the Company's general account. Amounts
allocated to the Guaranteed Account are credited with a guaranteed rate for one
year. Because of exemptive and exclusionary provisions, interests in the
Guaranteed Account have not been registered under the Securities Act of 1933 and
the Guaranteed 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 investments in the Funds are 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 business day of the period
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.
C. Federal Income Taxes - The Company is taxed under federal law as a life
insurance company. The Account is part of the Company'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.
D. The preparation of the accompanying financial statements required
management to make estimates and assumptions that affect the reported
values of assets and liabilities as of December 31, 1995 and the reported
amounts from operations and policy transactions during 1995 and 1994.
Actual results could differ from those estimates.
3. Contract Charges
Daily charges for mortality and expense risks assumed by the Company are
assessed through the daily unit value calculation on all contracts and are
equivalent on an annual basis to 1.25% of the value of the contracts.
Daily charges for administrative expenses are assessed through the daily unit
value calculation on all contracts issued subsequent to February 5, 1992 (i.e.
Variable Annuity II contracts) and are equivalent on an annual basis to 0.15% of
the value of the contracts. In addition, an annual administrative expense charge
of $30 is assessed against each contract on its anniversary date by surrendering
units.
The contracts provide that in the event that a contract owner withdraws all or a
portion of the contract value within six contract years they will be assessed a
deferred sales charge. The deferred sales charge is based on a table of charges,
of which the maximum charge is 6% of the contract value subject to a maximum of
8.5% of purchase payments.
Certain states impose premium taxes upon contracts. The Company intends to
advance premium taxes due until the contract is surrendered or annuitized.
4
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Purchases of Investments
For the years ended December 31, 1995 and December 31, 1994, investment activity
in the Fund was as follows:
1995 1994
--------------------- ---------------------
Cost of Proceeds Cost of Proceeds
Shares of Purchases From Sales Purchases From Sales
- --------- --------- ---------- --------- ----------
Delaware Group Premium Fund:
Equity/Income Series ......... $3,016,007 $5,037,142 $2,717,154 $4,466,353
High Yield Series ............ 2,002,542 2,726,324 3,910,944 4,332,683
Capital Reserves Series ...... 660,010 874,804 639,536 1,503,333
Multiple Strategy Series ..... 293,985 1,219,564 500,257 1,083,983
Money Market Series .......... 2,870,485 4,582,312 7,581,057 6,593,379
Growth Series ................ 654,264 935,593 2,209,129 2,314,771
5. Net Increase in Accumulation Units
For the year ended December 31, 1995 transactions in accumulation units of the
account were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Equity/ High Capital Multiple Money
Income Yield Reserves Strategy Market Growth
Series Series Series Series Series Series
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VARIABLE ANNUITY
Units Purchased ............. -- -- -- -- -- --
Units Withdrawn ............. (232,370.67) (48,142.39) (39,062.04) (44,739.67) (66,549.52) (22,387.89)
Units Transferred
Between Funds ............. 71,279.91 (20,644.06) 13,936.15 (349.19) (77,102.76) 690.66
Net Units Transferred From
(To) AIG Life ............. (7,604.69) 3,328.33 2,292.29 (40.15) (1,109.63) (2,809.64)
------------ ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease) ..... (168,695.45) (65,458.12) (22,833.60) (45,129.01) (144,761.91) (24,506.87)
Units, at Beginning
of the Year ............... 1,427,535.08 304,274.04 158,388.94 388,052.88 327,446.23 133,585.16
------------ ---------- ---------- ---------- ---------- ----------
Units, at End of the Year ... 1,258,839.63 238,815.92 135,555.34 342,923.87 182,684.32 109,078.29
============ ========== ========== ========== ========== ==========
Unit Value at
December 31, 1995 ......... $ 18.79 $ 18.42 $ 15.30 $ 21.25 $ 13.24 $ 14.87
============ ========== =========== =========== =========== ===========
VARIABLE ANNUITY II
Units Purchased ............. -- -- -- -- 946.25 --
Units Withdrawn ............. (734.53) (2,010.25) (4.65) (51.71) (8.87) (253.21)
Units Transferred
Between Funds ............. (3,245.47) 1,277.34 (978.92) -- 2,294.65 1,344.35
Net Units Transferred From
(To) AIG Life ............. -- -- -- -- (946.25) --
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) ..... (3,980.00) (732.91) (983.57) (51.71) 2,285.78 1,091.14
Units, at Beginning
of the Year .............. 30,334.55 31,675.84 7,014.71 17,525.43 5,328.06 17,376.40
----------- ----------- ----------- ----------- ----------- -----------
Units, at End of the Year ... 26,354.55 30,942.93 6,031.14 17,473.72 7,613.84 18,467.54
=========== =========== =========== =========== =========== ===========
Unit Value at
December 31, 1995 ......... $ 16.08 $ 13.14 $ 11.60 $ 14.20 $ 10.87 $ 13.40
=========== =========== =========== =========== =========== ===========
</TABLE>
5
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
REPORT OF INDEPENDENT ACCOUNTANTS
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
Equity/Income, High Yield, Capital Reserves, Multiple Strategy, Money Market and
Growth Subaccounts, as of December 31, 1995, 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 at December 31, 1995 by correspondence with the
transfer agent. 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, 1995, 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 19, 1996
6
<PAGE>
