THE ALLIANCE GALLERY
Annual Report to Contract Owners
AIG Life Insurance Company
Variable Account I
Alliance Variable Products Series Fund, Inc.
December 31, 1995
<PAGE>
<TABLE>
<CAPTION>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
Shares Cost
------------- -----------
<S> <C> <C> <C>
Assets:
Investments at Market Value:
Alliance Variable Products Series Fund, Inc.:
Money Market Portfolio .................................... 19,642,344.000 $ 19,642,344 $ 19,642,344
Premier Growth Portfolio .................................. 1,020,681.880 16,607,744 18,168,136
Growth & Income Portfolio ................................. 1,537,763.760 21,422,124 24,281,289
International Portfolio ................................... 808,809.670 10,708,443 11,379,952
Short-Term Multi-Market Portfolio ......................... 108,752.580 1,116,260 1,150,602
Global Bond Portfolio ..................................... 222,515.760 2,455,370 2,703,566
U.S. Government/High Grade
Securities Portfolio .................................... 869,020.910 9,328,907 10,132,784
Global Dollar Government Portfolio ........................ 235,846.390 2,486,276 2,818,363
North American Government Portfolio ....................... 533,873.600 5,116,377 5,594,995
Utility Income Portfolio .................................. 352,280.960 3,882,202 4,230,894
Conservative Investors Portfolio .......................... 398,577.390 4,413,976 4,687,271
Growth Investors Portfolio ................................ 286,861.090 3,206,307 3,405,040
Growth Portfolio .......................................... 2,174,689.460 26,959,532 30,945,832
Total Return Portfolio .................................... 302,011.740 3,610,049 3,865,750
Worldwide Privatization Portfolio ......................... 388,192.630 4,125,598 4,336,112
------------ ------------
Total Investments ................................... $135,081,509 $147,342,930
Dividends Receivable ........................................ 73,252
Receivable from AIG Life .................................... 49,202
------------
Total Assets ........................................ $147,465,384
============
Equity:
Contract Owners' Equity ................................... $147,465,384
------------
Total Equity ........................................ $147,465,384
============
</TABLE>
See Notes to Financial Statements
1
<PAGE>
<TABLE>
<CAPTION>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
Money Premier Growth & Inter-
Market Growth Income national
Total Portfolio Portfolio Portfolio Portfolio
---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Investment Income (Loss):
Dividends ........................ $ 1,072,873 $ 565,316 $ 30,520 $ 169,942 $ 36,275
Expenses:
Mortality & Expense Risk Fees .. 928,566 143,279 85,960 138,497 89,127
Daily Adminstrative Charges .... 111,151 17,117 10,292 16,859 10,951
----------- ----------- ----------- ----------- -----------
1,039,717 160,396 96,252 155,356 100,078
----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) ... 33,156 404,920 (65,732) 14,586 (63,803)
----------- ----------- ----------- ----------- -----------
Realized and Unrealized Gain (Loss)
on Investments:
Realized Gain (Loss) on Investment
Activity ....................... 227,794 -- 92,209 30,936 29,327
Change in Unrealized Appreciation
(Depreciation) ................. 12,845,829 -- 1,577,208 2,933,771 737,015
----------- ----------- ----------- ----------- -----------
Net Gain (Loss) on Investments ... 13,073,623 -- 1,669,417 2,964,707 766,342
Increase (Decrease) in Net Assets
Resulting From Operations ........ $13,106,779 $ 404,920 $ 1,603,685 $ 2,979,293 $ 702,539
=========== =========== =========== =========== ===========
<CAPTION>
Short-Term Global U.S. Gov't Global N.Amer. Utility
Multi-Market Bond High Grd Dollar Gov't Gov't Income
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment Income (Loss):
Dividends ........................ $ -- $ 9,984 $ 87,891 $ 20,765 $ 114,967 $ 14,027
Expenses:
Mortality & Expense Risk Fees .. 9,662 18,079 71,630 19,418 49,011 27,430
Daily Adminstrative Charges .... 1,154 1,676 8,564 2,322 5,858 3,279
----------- ----------- ----------- ----------- ----------- -----------
10,816 19,755 80,194 21,740 54,869 30,709
----------- ----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) ... (10,816) (9,771) 7,697 (975) 60,098 (16,682)
----------- ----------- ----------- ----------- ----------- -----------
Realized and Unrealized Gain (Loss)
on Investments:
Realized Gain (Loss) on Investment
Activity ....................... (23,794) (15,732) 40,450 8,612 (170,057) 33,618
Change in Unrealized Appreciation
(Depreciation) ................. 66,442 291,336 850,195 347,878 905,309 371,845
----------- ----------- ----------- ----------- ----------- -----------
Net Gain (Loss) on Investments ... 42,648 275,604 890,645 356,490 735,252 405,463
Increase (Decrease) in Net Assets
Resulting From Operations ........ $ 31,832 $ 265,833 $ 898,342 $ 355,515 $ 795,350 $ 388,781
=========== =========== =========== =========== =========== ===========
<CAPTION>
Conservative Growth Total Worldwide
Investors Investors Growth Return Privatization
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Investment Income (Loss):
Dividends ........................ $ 2,971 $ 733 $ 8,337 $ 5,444 $ 5,701
Expenses:
Mortality & Expense Risk Fees .. 23,525 15,147 188,655 17,326 31,820
Daily Adminstrative Charges .... 2,816 1,814 22,569 2,075 3,805
----------- ----------- ----------- ----------- -----------
26,341 16,961 211,224 19,401 35,625
----------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) ... (23,370) (16,228) (202,887) (13,957) (29,924)
----------- ----------- ----------- ----------- -----------
Realized and Unrealized Gain (Loss)
on Investments:
Realized Gain (Loss) on Investment
Activity ....................... 22,158 14,539 142,991 16,746 5,791
Change in Unrealized Appreciation
(Depreciation) ................. 269,922 201,543 3,832,350 257,274 203,741
----------- ----------- ----------- ----------- -----------
Net Gain (Loss) on Investments ... 292,080 216,082 3,975,341 274,020 209,532
Increase (Decrease) in Net Assets
Resulting From Operations ........ $ 268,710 $ 199,854 $ 3,772,454 $ 260,063 $ 179,608
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
2-3
<PAGE>
<TABLE>
<CAPTION>
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
1995
Money Premier Growth & Inter-
Market Growth Income national
Total Portfolio Portfolio Portfolio Portfolio
----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) .............. $ 33,156 $ 404,920 $ (65,732) $ 14,586 $ (63,803)
Realized Gain (Loss) on Investment Activity 227,794 -- 92,209 30,936 29,327
Change in Unrealized Appreciation
(Depreciation) of Investments ........... 12,845,829 -- 1,577,208 2,933,771 737,015
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations ................. 13,106,779 404,920 1,603,685 2,979,293 702,539
------------- ------------- ------------- ------------- -------------
Capital Transactions:
Contract Deposits ......................... 110,960,236 42,053,738 10,738,137 12,438,557 4,534,346
Transfers Between Funds ................... -- (20,616,576) 3,750,242 4,463,538 1,557,208
Transfers From (To) AIG Life .............. (4,604,746) (4,764,668) 50,512 7,068 142,335
Administrative Charges .................... (20,148) (1,483) (2,212) (3,747) (2,776)
Death Benefits ............................ (2,287,456) (1,099,777) (23,760) (243,637) (68,089)
Contract Withdrawals ...................... (2,997,013) (663,922) (172,094) (470,143) (269,782)
Deferred Sales Charges .................... (61,864) (17,679) (4,712) (7,203) (5,086)
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions ..... 100,989,009 14,889,633 14,336,113 16,184,433 5,888,156
------------- ------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets ..... 114,095,788 15,294,553 15,939,798 19,163,726 6,590,695
Net Assets, at Beginning of Year ............ 33,369,596 4,426,412 2,269,769 5,117,686 4,789,392
------------- ------------- ------------- ------------- -------------
Net Assets, at End of Year .................. $ 147,465,384 $ 19,720,965 $ 18,209,567 $ 24,281,412 $ 11,380,087
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
1995
Short-Term Global U.S. Gov't Global N.Amer.
Multi-Market Bond High Grd Dollar Gov't Gov't
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) .............. $ (10,816) $ (9,771) $ 7,697 $ (975) $ 60,098
Realized Gain (Loss) on Investment Activity (23,794) (15,732 40,450 8,612 (170,057)
Change in Unrealized Appreciation
(Depreciation) of Investments ........... 66,442 291,336 850,195 347,878 905,309
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations ................. 31,832 265,833 898,342 355,515 795,350
------------- ------------- ------------- ------------- -------------
Capital Transactions:
Contract Deposits ......................... 926,377 1,117,003 5,364,390 1,202,676 2,579,730
Transfers Between Funds ................... (676,387) 591,145 1,361,265 662,282 (396,005)
Transfers From (To) AIG Life .............. (2,678) (45,688) (14,266) -- --
Administrative Charges .................... (232) (450) (1,450) (380) (1,573)
Death Benefits ............................ (1,048) (7,371) (190,203) (32,866) (145,317)
Contract Withdrawals ...................... (35,410) (97,067) (301,386) (43,561) (199,515)
Deferred Sales Charges .................... -- (2,793) (3,319) (784) (2,934)
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions ..... 210,622 1,554,779 6,215,031 1,787,367 1,834,386
------------- ------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets ..... 242,454 1,820,612 7,113,373 2,142,882 2,629,736
Net Assets, at Beginning of Year ............ 908,042 882,982 3,018,486 675,482 2,965,066
------------- ------------- ------------- ------------- -------------
Net Assets, at End of Year .................. $ 1,150,496 $ 2,703,594 $ 10,131,859 $ 2,818,364 $ 5,594,802
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
1995
Utility Conservative Growth Total Worldwide
Income Investors Investors Growth Return Privatization
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) .......... $ (16,682) $ (23,370) $ (16,228) $ (202,887) $ (13,957) $ (29,924)
Realized Gain (Loss) on Investment
Activity ............................ 33,618 22,158 14,539 142,991 16,746 5,791
Change in Unrealized Appreciation
(Depreciation) of Investments ....... 371,845 269,922 201,543 3,832,350 257,274 203,741
------------ ------------ ------------ ------------- ------------ ------------
Increase (Decrease) in Net Assets
Resulting from Operations ............. 388,781 268,710 199,854 3,772,454 260,063 179,608
------------ ------------ ------------ ------------- ------------ ------------
Capital Transactions:
Contract Deposits ..................... 2,546,126 3,212,305 2,350,845 16,825,901 2,819,685 2,250,420
Transfers Between Funds ............... 477,280 797,350 665,831 5,917,824 566,214 878,789
Transfers From (To) AIG Life .......... (24,043) -- -- 43,380 3,302 --
Administrative Charges ................ (537) (884) (195) (3,382) (112) (735)
Death Benefits ........................ (107,631) (135,759) (77,953) (83,793) (65,588) (4,664)
Contract Withdrawals .................. (147,166) (78,277) (22,616) (414,058) (53,176) (28,840)
Deferred Sales Charges ................ (3,000) (3,357) (3) (10,734) (38) (222)
------------ ------------ ------------ ------------- ------------ ------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions . 2,741,029 3,791,378 2,915,909 22,275,138 3,270,287 3,094,748
------------ ------------ ------------ ------------- ------------ ------------
Total Increase (Decrease) in Net Assets . 3,129,810 4,060,088 3,115,763 26,047,592 3,530,350 3,274,356
Net Assets, at Beginning of Year ........ 1,101,098 629,981 289,282 4,899,287 334,870 1,061,761
------------ ------------ ------------ ------------- ------------ ------------
Net Assets, at End of Year .............. $ 4,230,908 $ 4,690,069 $ 3,405,045 $ 30,946,879 $ 3,865,220 $ 4,336,117
============ ============ ============ ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
1994
Money Premier Growth & Inter-
Market Growth Income national
Total Portfolio Portfolio Portfolio Portfolio
----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) .............. $ 36,680 $ 38,323 $ (11,079) $ 14,638 $ (14,680)
Realized Gain (Loss) on Investment
Activity ................................ (19,154) -- 4,147 2,879 4,498
Change in Unrealized Appreciation
(Depreciation) of Investments ........... (595,557) -- (21,343) (79,392) (68,691)
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations ................. (578,031) 38,323 (28,275) (61,875) (78,873)
------------- ------------- ------------- ------------- -------------
Capital Transactions:
Contract Deposits ......................... 34,923,601 12,769,522 1,647,838 3,463,022 3,606,659
Transfers Between Funds ................... -- (6,081,820) 457,808 1,436,775 1,074,155
Transfer From (To) AIG Life ............... (2,196,064) (2,262,382) 15,998 21,514 24,038
Administrative Charges .................... (1,474) (23) (168) (291) (286)
Death Benefits ............................ (105,575) (105,575) -- -- --
Contract Withdrawals ...................... (267,697) (17,149) (15,667) (73,276) (56,095)
Deferred Sales Charges .................... (3,900) -- (380) (1,208) (1,165)
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions ..... 32,348,891 4,302,573 2,105,429 4,846,536 4,647,306
------------- ------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets ..... 31,770,860 4,340,896 2,077,154 4,784,661 4,568,433
Net Assets, at Beginning of Year ............ 1,598,736 85,516 192,615 333,025 220,959
------------- ------------- ------------- ------------- -------------
Net Assets, at End of Year .................. $ 33,369,596 $ 4,426,412 $ 2,269,769 $ 5,117,686 $ 4,789,392
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
1994
Short-Term Global U.S. Gov't Global N.Amer.
Multi-Market Bond High Grd Dollar Gov't Gov't
Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) .............. $ 8,211 $ 27,561 $ 19,721 $ (3,543) $ (19,548)
Realized Gain (Loss) on Investment
Activity ................................ 86 (5,329) (10,894) 47 (16,961)
Change in Unrealized Appreciation
(Depreciation) of Investments ........... (32,855) (45,024) (42,340) (15,791) (426,693)
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations ................. (24,558) (22,792) (33,513) (19,287) (463,202)
------------- ------------- ------------- ------------- -------------
Capital Transactions:
Contract Deposits ......................... 346,929 553,883 2,242,232 556,089 3,241,845
Transfers Between Funds ................... 440,344 165,632 421,682 160,981 233,697
Transfer From (To) AIG Life ............... -- -- (2,455) (16,815) --
Administrative Charges .................... (77) (130) (368) -- --
Death Benefits ............................ -- -- -- -- --
Contract Withdrawals ...................... (3,990) (20,050) (18,733) (5,486) (47,274)
Deferred Sales Charges .................... -- (772) (375) -- --
------------- ------------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions ..... 783,206 698,563 2,641,983 694,769 3,428,268
------------- ------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets ..... 758,648 675,771 2,608,470 675,482 2,965,066
Net Assets, at Beginning of Year ............ 149,394 207,211 410,016 -- --
------------- ------------- ------------- ------------- -------------
Net Assets, at End of Year .................. $ 908,042 $ 882,982 $ 3,018,486 $ 675,482 $ 2,965,066
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
1994
Utility Conservative Growth Total Worldwide
Income Investors Investors Growth Return Privatization
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) ........... $ (5,226) $ (1,594) $ (780) $ (12,496) $ (470) $ (2,358)
Realized Gain (Loss) on Investment
Activity ............................. 1,704 (37) (375) 1,108 (28) 1
Change in Unrealized Appreciation
(Depreciation) of Investments ........ (23,142) 3,373 (2,809) 153,950 (1,573) 6,773
----------- ----------- ----------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Operations .............. (26,664) 1,742 (3,964) 142,562 (2,071) 4,416
----------- ----------- ----------- ------------- ------------- -------------
Capital Transactions:
Contract Deposits ...................... 1,022,214 549,380 222,714 3,506,333 294,209 900,732
Transfers Between Funds ................ 109,771 79,401 70,532 1,230,919 43,406 156,717
Transfer From (To) AIG Life ............ -- -- -- 24,038 -- --
Administrative Charges ................. -- -- -- (131) -- --
Death Benefits ......................... -- -- -- -- -- --
Contract Withdrawals ................... (4,223) (542) -- (4,434) (674) (104)
Deferred Sales Charges ................. -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
Increase (Decrease) in Net Assets
Resulting from Capital Transactions .. 1,127,762 628,239 293,246 4,756,725 336,941 1,057,345
----------- ----------- ----------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets .. 1,101,098 629,981 289,282 4,899,287 334,870 1,061,761
Net Assets, at Beginning of Year ......... -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
Net Assets, at End of Year ............... $ 1,101,098 $ 629,981 $ 289,282 $ 4,899,287 $ 334,870 $ 1,061,761
=========== =========== =========== ============= ============= =============
</TABLE>
See Notes to Financial Statements
4-5
<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 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 flexible
premium deferred variable annuity contracts and group flexible premium 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 Portfolio); 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 World 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
Guaranteed Account, which is part of the Company's general account. Amounts
allocated to the Guaranteed Account are credited with a guaranteed rate of
interest for a selected period. 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.
6
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (continued)
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 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 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 of a premium payment,
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 for single premium contracts and 6% of premiums paid for flexible premium
contracts, 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.
7
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (continued)
4. Purchases of Investments
For the year ended December 31, 1995, investment activity in the Fund was as
follows:
Cost of Proceeds
Shares of Purchases From Sales
--------- --------- ----------
Alliance Variable Product Series Fund, Inc.:
Money Market Portfolio ......................... $56,570,058 $41,329,450
Premier Growth Portfolio ....................... 14,640,694 406,155
Growth & Income Portfolio ...................... 16,709,417 507,421
International Portfolio ........................ 6,489,642 661,150
Short-Term Multi-Market Portfolio .............. 1,023,930 824,682
Global Bond Portfolio .......................... 1,794,840 250,848
U.S. Government/High Grade
Securities Portfolio ......................... 7,214,306 993,437
Global Dollar Government Portfolio ............. 1,943,805 158,164
North American Government Portfolio ............ 3,328,334 1,437,414
Utility Income Portfolio ....................... 3,187,048 463,917
Conservative Investors Portfolio ............... 4,006,150 241,575
Growth Investors Portfolio ..................... 3,089,209 189,823
Growth Portfolio ............................... 22,675,221 608,865
Total Return Portfolio ......................... 3,428,937 172,275
Worldwide Privatization Portfolio .............. 3,135,858 72,161
For the year ended December 31, 1994, investment activity in the Fund was as
follows:
Cost of Proceeds
Shares of Purchases From Sales
--------- --------- ----------
Alliance Variable Product 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
Securities Portfolio ......................... 2,858,253 193,599
Global Dollar Government Portfolio ............. 699,038 7,062
North American Government Portfolio ............ 3,931,308 518,821
Utility Income Portfolio ....................... 1,173,929 50,176
Conservative Investors Porfolio ................ 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 Privatization Portfolio .............. 1,056,582 474
8
<PAGE>
AIG LIFE INSURANCE COMPANY
(AIG LIFE)
VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (continued)
5. Net Increase (Decrease) in Accumulation Units
For the year ended December 31, 1995, transactions in accumulation units of the
account were as follows:
<TABLE>
<CAPTION>
Money Premier Growth & Inter- Short-Term
Market Growth Income national Multi-Market
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Units Purchased ......................... 4,012,569.68 768,078.72 845,677.91 410,788.96 94,571.35
Units Withdrawn ......................... (167,658.14) (18,847.63) (41,612.69) (32,013.67) (3,733.94)
Units Transferred Between Funds ......... (1,966,454.16) 276,223.82 311,870.32 142,761.07 (71,061.98)
Units Transferred From (To) AIG Life .... (453,756.87) 3,206.05 (66.05) 12,317.14 (285.32)
------------ ----------- ----------- --------- ---------
Net Increase (Decrease) ................. 1,424,700.51 1,028,660.96 1,115,869.49 533,853.50 19,490.11
Units, at Beginning of the Year ......... 431,319.86 223,550.22 438,680.32 447,407.41 95,717.60
------------ ----------- ----------- --------- ---------
Units, at End of the Year ............... 1,856,020.37 1,252,211.18 1,554,549.81 981,260.91 115,207.71
============ =========== =========== ========= =========
Unit Value at December 31, 1995 ......... $ 10.63 $ 14.54 $ 15.62 $ 11.60 $ 9.99
============ =========== =========== ========= =========
<CAPTION>
Global U.S. Gov't Global N.Amer Utility
Bond High Grd Dollar Gov't Gov't Income
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Units Purchased ......................... 93,649.22 515,038.50 114,782.36 276,497.06 229,837.58
Units Withdrawn ......................... (9,211.58) (48,037.25) (8,457.65) (39,738.48) (24,022.41)
Units Transferred Between Funds ......... 47,995.76 129,453.74 62,807.07 (46,201.27) 42,973.57
Units Transferred From (To) AIG Life .... (4,421.85) (2,040.87) -- -- (2,387.37)
------------ ----------- ----------- --------- ---------
Net Increase (Decrease) ................. 128,011.55 594,414.12 169,131.78 190,557.31 246,401.37
Units, at Beginning of the Year ......... 85,875.16 320,574.64 69,320.82 340,817.36 111,604.02
------------ ----------- ----------- --------- ---------
Units, at End of the Year ............... 213,886.71 914,988.76 238,452.60 531,374.67 358,005.39
============ =========== =========== ========= =========
Unit Value at December 31, 1995 ......... $ 12.64 $ 11.07 $ 11.82 $ 10.53 $ 11.82
============ =========== =========== ========= =========
<CAPTION>
Conservative Growth Total World
Investors Investors Growth Return Privatization
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Units Purchased ......................... 289,696.48 207,986.51 1,303,272.53 254,107.29 209,987.09
Units Withdrawn ......................... (19,666.46) (9,435.63) (39,956.22) (11,270.64) (3,205.31)
Units Transferred Between Funds ......... 72,294.23 64,129.40 480,924.78 50,436.18 82,248.41
Units Transferred From (To) AIG Life .... -- -- 3,162.97 298.68 --
------------ ----------- ----------- --------- ---------
Net Increase (Decrease) ................. 342,324.25 262,680.28 1,747,404.06 293,571.51 289,030.19
Units, at Beginning of the Year ......... 62,868.02 29,492.78 467,688.06 34,684.53 105,674.08
------------ ----------- ----------- --------- ---------
Units, at End of the Year ............... 405,192.27 292,173.06 2,215,092.12 328,256.04 394,704.27
============ =========== =========== ========= =========
Unit Value at December 31, 1995 ......... $ 11.57 $ 11.65 $ 13.97 $ 11.78 $ 10.99
============ =========== =========== ========= =========
</TABLE>
9
<PAGE>
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 Money
Market, Premier Growth, Growth and Income, International, Short-Term
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 Subaccount,
as of December 31, 1995, an the related statement of operations for the year
then ended, and the statements 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 as of 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
10
