<PAGE> 1
File Nos. 33-32569
811-4296
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 32
(Check appropriate box or boxes)
VARIABLE ANNUITY ACCOUNT ONE
(Exact Name of Registrant)
Anchor National Life Insurance Company
(Name of Depositor)
1 SunAmerica Center
Los Angeles, California 90067-6022
(Address of Depositor's Principal Offices) (Zip Code)
Depositor's Telephone Number, including Area Code
(310) 772-6000
Susan L. Harris, Esq.
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
(Name and Address of Agent for Service)
<TABLE>
<CAPTION>
Title and Amount
of Securities Amount of
Being Registered Registration Fee
- ---------------- ----------------
<S> <C> <C>
Flexible Payment Pursuant to Rule 24f-2, the $
Deferred Annuity Registrant has filed an election
Contracts to register an indefinite
number of securities
under the Securities Act of 1933
</TABLE>
It is proposed that this filing will become effective:
-- immediately upon filing pursuant to paragraph (b) of Rule 485
X on February 2, 1998 pursuant to paragraph (b) of Rule 485
-- 60 days after filing pursuant to paragraph (a) of Rule 485
-- on [date] pursuant to paragraph (a) of Rule 485
The registrant has elected pursuant to Rule 24f-2 under the Investment Company
Act of 1940 to register an indefinite amount of securities. The Registrant
intends to file its Rule 24f-2 Notice for the fiscal year ended December 31,
1997 on or about February 27, 1998.
<PAGE> 2
VARIABLE ANNUITY ACCOUNT ONE
Cross Reference Sheet
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
- ----------------------- -------
<S> <C> <C>
1. Cover Page............................. Cover Page
2. Definitions............................ Definitions
3. Synopsis............................... Summary
4. Condensed Financial Information........ Condensed Financial
Information-Accumulation
Unit Values
5. General Description of Registrant,
Depositor and Portfolio Companies ..... Description of Anchor
National Life Insurance
Company and the Separate
Account; Anchor Series
Trust
6. Deductions............................. Contract Charges
7. General Description of
Variable Annuity Contracts............. Description of the
Contracts
8. Annuity Period......................... Annuity Period
9. Death Benefit.......................... Description of the
Contracts; Annuity Period
10. Purchases and Contract Value........... Purchases and Contract
Value
11. Redemptions............................ Purchases and Contract
Value
12. Taxes.................................. Taxes
13. Legal Proceedings...................... Legal Proceedings
14. Table of Contents of Statement
of Additional Information.............. Table of Contents of the
Statement of Additional
Information
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
Certain information required in part B of the Registration Statement
has been included within the Prospectus forming part of this Registration
Statement; the following cross-references suffixed with a "P" are made by
reference to the captions in the Prospectus.
Item Number in Form N-4 Caption
- ----------------------- -------
15. Cover Page............................. Cover Page
16. Table of Contents...................... Table of Contents
17. General Information and History........ Company
18. Services............................... Not Applicable
19. Purchase of Securities Being Offered... Purchases and Contract
Value (P)
20. Underwriters........................... Distributors
21. Calculation of Performance Data........ Performance Data
22. Annuity Payments....................... Annuity Payments
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 of this Registration Statement.
<PAGE> 4
- --------------------------------------------------------------------------------
FLEXIBLE PAYMENT VARIABLE ANNUITY
CONTRACTS
- --------------------------------------------------------------------------------
ISSUED BY
ANCHOR NATIONAL LIFE INSURANCE COMPANY
IN CONNECTION WITH
VARIABLE ANNUITY ACCOUNT ONE
<TABLE>
<S> <C>
CORRESPONDENCE ACCOMPANIED ALL OTHER CORRESPONDENCE,
BY PAYMENTS ADMINISTRATIVE SERVICE CENTER:
P.O. BOX 100330 P.O. BOX 54299
PASADENA, CALIFORNIA 91189-0001 LOS ANGELES, CALIFORNIA 90054-0299
TELEPHONE NUMBER: (800) 445-7862
</TABLE>
The Contracts offered by this Prospectus provide for accumulation of
Contract Values and payment of annuity benefits on a variable basis. The
Contracts are available for both Qualified and Nonqualified Plans. (See
"Taxes").
Purchase Payments under the Contracts may be allocated among the Divisions
of the Separate Account, and/or to the Fixed Account option funded through the
Company's General Account. Each of the eleven Divisions of the Separate Account
described in this Prospectus are invested solely in the shares of one of the
following currently available portfolios of Anchor Series Trust:
<TABLE>
<S> <C>
- Foreign Securities Portfolio - Strategic Multi-Asset Portfolio
- Capital Appreciation Portfolio - Multi-Asset Portfolio
- Growth Portfolio - High Yield Portfolio
- Natural Resources Portfolio - Fixed Income Portfolio
- Growth and Income Portfolio - Government and Quality Bond Portfolio
(formerly the Convertible Securities - Money Market Portfolio
Portfolio)
</TABLE>
Additional Portfolios may be made available in the future.
The Fixed Account option pays a fixed rate of interest declared by the
Company for one year from the date amounts are allocated to it.
This Prospectus concisely sets forth the information a prospective investor
ought to know before investing. PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN
IT FOR YOUR FUTURE REFERENCE. Owners bear the complete investment risk for all
Purchase Payments allocated to the Separate Account.
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.
THE CONTRACTS OFFERED BY THIS PROSPECTUS INVOLVE RISK, INCLUDING LOSS OF
PRINCIPAL, AND ARE NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE IN ALL STATES.
A Statement of Additional Information about the variable portion of the
Contracts has been filed with the Commission, as part of the Registration
Statement, and is available without charge upon written or oral request to the
Company at its Administrative Service Center at the address and telephone number
set forth above. The Statement of Additional Information is incorporated herein
by reference. The Table of Contents of the Statement of Additional Information,
dated February 2, 1998, appears on page 29 of this Prospectus.
This Prospectus is dated February 2, 1998.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---------------------------------------------------------------------------------------------------- ----
<S> <C>
DEFINITIONS......................................................................................... 2
SUMMARY............................................................................................. 4
FEE TABLES.......................................................................................... 6
EXAMPLES............................................................................................ 7
EXPLANATION OF FEE TABLES AND EXAMPLES.............................................................. 7
CONDENSED FINANCIAL INFORMATION -- ACCUMULATION UNIT VALUES......................................... 8
PERFORMANCE DATA.................................................................................... 9
DESCRIPTION OF ANCHOR NATIONAL LIFE INSURANCE COMPANY AND
THE SEPARATE ACCOUNT.............................................................................. 9
Company......................................................................................... 9
Reinsurance of Previously Issued Contracts...................................................... 10
Separate Account................................................................................ 10
FINANCIAL STATEMENTS................................................................................ 11
ANCHOR SERIES TRUST................................................................................. 11
Equity Portfolios............................................................................... 11
Managed Portfolios.............................................................................. 12
Fixed Income Portfolios......................................................................... 12
Contract Owners in Target '98 Portfolio......................................................... 13
Voting Rights................................................................................... 13
Substitution of Securities...................................................................... 13
CONTRACT CHARGES.................................................................................... 13
Mortality and Expense Risk Charge............................................................... 13
Administrative Charges.......................................................................... 14
Administrative Expense Charge................................................................. 14
Records Maintenance Charge.................................................................... 14
Sales Charges................................................................................... 14
Withdrawal Charge............................................................................. 14
Annuity Charge................................................................................ 15
Premium Taxes................................................................................... 15
Deduction for Separate Account Income Taxes..................................................... 15
Other Expenses.................................................................................. 15
Reduction of Charges for Sales to Certain Groups................................................ 16
DESCRIPTION OF THE CONTRACTS........................................................................ 16
Transfer During Accumulation Period............................................................. 16
Automatic Dollar Cost Averaging Program......................................................... 17
Modification of the Contract.................................................................... 17
Assignment...................................................................................... 17
Death of Owner of Non-Qualified Contract........................................................ 17
Death Benefit................................................................................... 18
Beneficiary..................................................................................... 18
ANNUITY PERIOD...................................................................................... 19
Annuity Date.................................................................................... 19
Allocation of Annuity Payments.................................................................. 19
Annuity Options................................................................................. 19
Other Options................................................................................... 20
Transfer During Annuity Period.................................................................. 21
Death Benefit During Annuity Period............................................................. 21
PURCHASES AND CONTRACT VALUE........................................................................ 21
Minimum Purchase Payment........................................................................ 21
Maximum Purchase Payment........................................................................ 21
Allocation of Purchase Payments................................................................. 21
Accumulation Unit Value......................................................................... 22
Distribution of Contracts....................................................................... 22
Withdrawals (Redemptions)....................................................................... 23
Systematic Withdrawal Program................................................................... 23
ERISA Plans..................................................................................... 24
Texas Optional Retirement Program............................................................... 24
Minimum Contract Value.......................................................................... 24
ADMINISTRATION...................................................................................... 24
TAXES............................................................................................... 24
General......................................................................................... 25
Withholding Tax on Distributions................................................................ 25
Diversification................................................................................. 25
Multiple Contracts.............................................................................. 26
Tax Treatment of Assignments.................................................................... 26
Tax Treatment of Withdrawals -- Non-Qualified Contracts......................................... 26
Qualified Plans................................................................................. 26
Tax Treatment of Withdrawals -- Qualified Contracts............................................. 28
Tax Sheltered Annuities -- Withdrawal Limitations............................................... 28
Deferred Compensation Plans -- Section 457...................................................... 28
LEGAL PROCEEDINGS................................................................................... 29
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........................................ 29
</TABLE>
(i)
<PAGE> 6
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
The following terms, as used in this Prospectus, have the indicated
meanings:
ACCUMULATION PERIOD -- The period between the Issue Date of the Contract and the
Annuity Date, the build-up phase of the Contract.
ACCUMULATION UNIT -- A unit of measurement which the Company uses to calculate
Contract Value during the Accumulation Period.
ADMINISTRATIVE SERVICE CENTER -- Its current address and phone number are: P.O.
Box 54299, Los Angeles, California 90054-0299, (800) 445-7862. Correspondence
accompanying a payment should be directed to P.O. Box 100330, Pasadena,
California 91189-0001. The Company will notify Contract Owners of any change in
address or telephone number.
ANNUITANT(S) -- The person(s) designated on the application to receive or who
actually receive(s) annuity payments. Annuity payments involving life
contingencies depend on the continuation of an Annuitant's life.
ANNUITIZATION -- The process by which an Owner converts from the Accumulation
Period to the Annuity Period. Upon Annuitization, the Contract is converted from
the build-up phase to the phase during which the Annuitant(s) receive(s)
periodic annuity payments.
ANNUITY DATE -- The date on which annuity payments are to begin.
ANNUITY PERIOD -- The period starting on the Annuity Date.
ANNUITY UNIT -- A unit of measurement which the Company uses to calculate the
amount of Variable Annuity payments.
BENEFICIARY(IES) -- The person designated to receive any benefits under a
Contract upon the death of the Annuitant or the Owner. If the Owner dies during
the Accumulation Period, the Beneficiary will, unless the Owner has elected
otherwise, become the Owner of the Contract.
CODE -- The Internal Revenue Code of 1986, as amended.
COMPANY -- Anchor National Life Insurance Company, an Arizona corporation.
CONTRACT(S) -- The flexible payment variable annuity contracts offered by this
Prospectus.
CONTRACT OWNER(S) OR OWNER(S) -- The person(s) having the privileges of
ownership defined in the Contract. If an Owner dies during the Accumulation
Period, the Beneficiary will, unless the Owner has elected otherwise, become the
Owner of the Contract. Joint Owners have equal ownership interests in the
Contract unless the Company is advised otherwise in writing. Only spouses may be
Joint Owners.
CONTRACT VALUE -- The sum of the values of the Owner's interest in the General
Account and the Separate Account Divisions.
CONTRACT YEAR -- A year starting from the Issue Date in one calendar year and
ending on the Issue Date in the succeeding calendar year.
CONTRIBUTION YEAR -- With respect to a given Purchase Payment, a year starting
from the date of the Purchase Payment in one calendar year and ending on the day
before the anniversary of such date in the succeeding calendar years. The
Contribution Year in which a Purchase Payment is made is "Contribution Year 1".
Subsequent Contribution Years are successively numbered beginning with
Contribution Year 2.
DIVISION OR SEPARATE ACCOUNT DIVISION -- A Division of the Separate Account
invested wholly in shares of one of the Portfolios of the Trust.
DUE PROOF OF DEATH -- (1) A certified copy of a death certificate; or (2) a
certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or (3) a written statement by a medical doctor who attended
the deceased at time of death; or (4) any other proof satisfactory to the
Company.
FIXED ANNUITY -- A series of payments that are fixed in amount and made during
the Annuity Period to a payee under a Contract.
GENERAL ACCOUNT -- The Company's general investment account which contains all
the assets of the Company, with the exception of the Separate Account and other
segregated asset accounts.
2
<PAGE> 7
ISSUE DATE -- The date a Contract is issued.
NON-QUALIFIED PLAN -- A retirement plan which does not receive favorable tax
treatment under Sections 401, 403(b), 408 or 457 of the Code.
PORTFOLIO -- One of the investment options available under the Contract in the
Trust.
PURCHASE PAYMENTS -- Amounts paid to the Company by a Contract Owner.
QUALIFIED PLAN -- A retirement plan which receives favorable tax treatment under
Sections 401, 403(b), 408 or 457 of the Code.
SEPARATE ACCOUNT OR ACCOUNT -- A segregated investment account of the Company
entitled "Variable Annuity Account One" (formerly "ICAP Variable Annuity Account
One").
TRUST -- Anchor Series Trust (formerly "Integrated Resources Series Trust").
VALUATION DATE -- Monday through Friday except for New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
VALUATION PERIOD -- The period commencing at 4:00 p.m. New York time on each
Valuation Date and ending at 4:00 p.m. New York time on the next succeeding
Valuation Date.
VARIABLE ANNUITY -- A series of payments made during the Annuity Period which
varies in amount in accordance with the investment experience of the Separate
Account Division(s).
WITHDRAWAL CHARGE -- The contingent deferred sales charge assessed against
certain withdrawals or annuitizations.
WITHDRAWAL VALUE -- Contract Value, less any premium tax payable if the Contract
is being annuitized, minus any applicable Withdrawal Charge.
3
<PAGE> 8
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This Prospectus describes the uses and objectives of the Contracts, their
costs, and the rights and privileges of the Owner. It also contains information
about the Company, the Separate Account and its Divisions, and the Portfolios in
which the Divisions invest. We urge you to read it carefully and retain it and
the Prospectus for the Trust for future reference. (The Prospectus for the Trust
is attached to and follows this Prospectus).
WHAT IS THE CONTRACT?
The Contract offered is a tax deferred annuity which provides fixed
benefits, variable benefits or a combination of both. Individuals wishing to
purchase a Contract must complete an application and provide an initial Purchase
Payment which will be sent to the Company at its Administrative Service Center
or in such other manner as deemed acceptable to the Company. The minimum and
maximum of Purchase Payments vary depending upon the type of Contract purchased.
(See "Minimum Purchase Payment").
WHAT IS THE DIFFERENCE BETWEEN A VARIABLE ANNUITY AND A FIXED ANNUITY?
The Contract has appropriate provisions relating to variable and fixed
accumulation values and variable and fixed annuity payments. A Variable Annuity
and a Fixed Annuity have certain similarities. Both provide that Purchase
Payments, less certain deductions, will be accumulated prior to the Annuity
Date. After the Annuity Date, annuity payments will be made to a designated
payee for the life of the Annuitant or a period certain or a combination
thereof. The Company assumes mortality and expense risks under the Contracts,
for which it receives certain compensation.
The most significant difference between a Variable Annuity and a Fixed
Annuity is that under a Variable Annuity, all investment risk before and after
the Annuity Date is assumed by the Owner or other payee; the amounts of the
annuity payments vary with the investment performance of the Divisions of the
Separate Account selected by the Owner. Under a Fixed Annuity, in contrast, the
investment risk after the Annuity Date is assumed by the Company and the amounts
of the annuity payments do not vary.
HOW MAY PURCHASE PAYMENTS BE ALLOCATED?
Purchase Payments for the Contracts may be allocated pursuant to
instructions in the application to one or more Divisions of the Separate
Account, and/or to the Company's General Account. The Separate Account invests
in shares of the following Portfolios (see "Anchor Series Trust"):
<TABLE>
<S> <C>
* FOREIGN SECURITIES * MULTI-ASSET
* CAPITAL APPRECIATION * HIGH-YIELD
* GROWTH * FIXED INCOME
* NATURAL RESOURCES * GOVERNMENT AND QUALITY BOND
* GROWTH AND INCOME * MONEY MARKET
* STRATEGIC MULTI-ASSET
</TABLE>
Purchase Payments allocated to the General Account will earn interest at the
current rate then being offered by the Company for a one year period beginning
on the date amounts are allocated to it.
Prior to the Annuity Date, transfers may be made among the Divisions and/or
the General Account. Fifteen transfers are permitted before a transfer fee will
be assessed. (See "Description of the Contracts -- Transfer During Accumulation
Period").
MAY WITHDRAWALS BE MADE BEFORE ANNUITIZATION?
Except as explained below, Contract Value may be withdrawn at any time
during the Accumulation Period. In addition to potential losses due to
investment risks, withdrawals may be reduced by a Withdrawal Charge, and a
penalty tax and income tax may apply. Contracts in connection with Qualified
Plans may be subject to additional withdrawal restrictions imposed by the plan.
Earnings under a Contract may be withdrawn at any time during such period free
of a Withdrawal Charge. Alternatively, there is a free withdrawal amount which
applies to the first withdrawal during a Contract Year after the first Contract
Year. (See "Contract Charges -- Sales Charges -- Withdrawal Charge"). Certain
Owners of Nonqualified Plan Contracts and Contracts issued in connection with
Individual Retirement Annuities ("IRAs") may choose to withdraw amounts which in
the aggregate add up to 10%
4
<PAGE> 9
of their Purchase Payments annually pursuant to a systematic withdrawal program
without charge. (See "Purchases and Contract Value -- Systematic Withdrawal
Program"). Withdrawals are taxable and a 10% federal tax penalty may apply to
withdrawals before age 59 1/2.
Owners should consult their own tax counsel or other tax adviser regarding
any withdrawals or distributions.
CAN I EXAMINE THE CONTRACT?
The Contract Owner may return the Contract to the Company within 10 days
(or longer period if required by state law) after it is received by delivering
or mailing it to the Company's Administrative Service Center. If the Contract is
returned to the Company, it will be terminated and, unless otherwise required by
state law, the Company will pay the Owner an amount equal to the Contract Value
represented by the Contract on the date it is received by the Company.
WHAT ARE THE CHARGES AND DEDUCTIONS UNDER A CONTRACT?
A mortality and expense risk charge is assessed daily against the assets of
each Division at an annual rate of 1.25%. An administrative expense charge is
assessed daily against the assets of each Division at an annual rate of 0.15%.
The Contracts also provide for certain deductions and charges, including a
Records Maintenance Charge of $30 annually, which is guaranteed not to increase.
The Contract permits up to 15 free transfers each Contract Year, after which
point a $25 transfer fee ($10 in Texas and Pennsylvania) is applicable to each
subsequent transfer. Additionally, a Withdrawal Charge may be assessed against
the Contract Value during the first five Contribution Years (5%-4%-3%-2%-1%)
when a withdrawal is made. (See "Contract Charges").
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Death Benefit is provided in the event of the death of the Owner during
the Accumulation Period. The Death Benefit is equal to the greater of: (1) the
Contract Value upon receipt of Due Proof of Death; or (2) the total of Purchase
Payments made prior to the death of the Owner, minus any partial withdrawals
and/or partial annuitizations and contract charges, all accumulated annually at
5%; or (3) after the fifth Contract Year, the Contract Value at the last
anniversary of the Issue Date of the Contract minus any partial withdrawals
and/or partial annuitizations since that anniversary. (See "Description of the
Contracts -- Death Benefit").
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are three available annuity options under the Contract. They include
an annuity for life, a joint and survivor annuity, and monthly payments for a
specified number of years. If a Contract Owner does not elect otherwise, monthly
annuity payments generally will be made under the first option to provide a life
annuity with 120 monthly payments certain. (See "Annuity Period -- Annuity
Options").
DOES THE OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Owners will have the right to vote on matters affecting the Portfolios to
the extent that proxies are solicited by the Trust. If the Owner does not vote,
the Company will vote such interests in the same proportion as it votes shares
for which it has received instructions. (See "Anchor Series Trust -- Voting
Rights").
5
<PAGE> 10
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (AS A PERCENTAGE OF PURCHASE PAYMENTS):
<TABLE>
<CAPTION>
CONTRIBUTION YEAR
<S> <C>
One....................................................................................... 5%
Two....................................................................................... 4%
Three..................................................................................... 3%
Four...................................................................................... 2%
Five...................................................................................... 1%
Six and later............................................................................. 0%
ANNUAL RECORDS MAINTENANCE CHARGE............................................................... $30
TRANSFER FEE.................................................................................... $25*
(applies solely to transfers in excess of fifteen in a Contract Year)
</TABLE>
- ---------------
* $10 in Pennsylvania and Texas.
The Owner Transaction Expenses apply to the Contract Value allocated to the
General Account, as well as the Separate Account.
- --------------------------------------------------------------------------------
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE)
<TABLE>
<S> <C>
MORTALITY RISK CHARGE.......................................................................... 0.90%
EXPENSE RISK CHARGE............................................................................ 0.35%
ADMINISTRATION EXPENSE CHARGE.................................................................. 0.15%
------
TOTAL EXPENSE CHARGE..................................................................... 1.40%
======
</TABLE>
- ---------------
ANNUAL TRUST EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996):
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT FEE OTHER EXPENSES EXPENSES
-------------- -------------- ------------
<S> <C> <C> <C>
Foreign Securities............................................... .9% .5% 1.4%
Capital Appreciation............................................. .7% .1% .8%
Growth........................................................... .7% .1% .8%
Natural Resources................................................ .8% .1% .9%
Growth and Income................................................ .7% .2% .9%
Strategic Multi-Asset............................................ 1.0% .4% 1.4%
Multi-Asset...................................................... 1.0% .1% 1.1%
High Yield....................................................... .7% .2% .9%
Target '98....................................................... .6% .3% .9%
Fixed Income..................................................... .6% .2% .8%
Government & Quality Bond........................................ .6% .1% .7%
Money Market..................................................... .5% .1% .6%
</TABLE>
6
<PAGE> 11
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE CONDITIONS
ACCOUNT A Contract Owner would pay the following expenses on a TIME PERIODS
DIVISION $1,000 investment assuming 5% annual return on assets: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN (a) upon surrender at the end of the stated time (a) $ 79 $ 117 $ 163 $324
period.
SECURITIES (b) if the Contract WAS NOT surrendered (b) 29 90 154 324
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL SAME (a) 73 99 133 265
APPRECIATION (b) 23 72 124 265
- ---------------------------------------------------------------------------------------------------------------------
GROWTH SAME (a) 73 99 133 265
(b) 23 72 124 265
- ---------------------------------------------------------------------------------------------------------------------
NATURAL SAME (a) 74 102 138 275
RESOURCES (b) 24 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
GROWTH AND SAME (a) 74 102 138 275
INCOME (b) 24 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
STRATEGIC SAME (a) 79 117 163 324
MULTI-ASSET (b) 29 90 154 324
- ---------------------------------------------------------------------------------------------------------------------
MULTI-ASSET SAME (a) 76 108 148 295
(b) 26 81 139 295
- ---------------------------------------------------------------------------------------------------------------------
HIGH YIELD SAME (a) 74 102 138 275
(b) 24 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
TARGET '98 SAME (a) 74 102 138 275
(b) 24 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
FIXED SAME (a) 73 99 133 265
INCOME (b) 23 72 124 265
- ---------------------------------------------------------------------------------------------------------------------
GOV'T & SAME (a) 72 96 128 255
QUALITY BOND (b) 22 69 119 255
- ---------------------------------------------------------------------------------------------------------------------
MONEY MARKET SAME (a) 71 93 123 245
(b) 21 66 114 245
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
EXPLANATION OF FEE TABLES
AND EXAMPLES
- --------------------------------------------------------------------------------
1. The purpose of the foregoing tables and examples is to assist the Contract
Owner in understanding the various costs and expenses that he or she will
bear directly or indirectly. The table reflects expenses of the Separate
Account as well as the Trust. For additional information see "Contract
Charges" of this Prospectus and "Management of the Trust" of the Prospectus
for the Trust. The examples do not illustrate the tax consequences of
surrendering a Contract.
2. The examples assume that there were no transactions which would result in
the imposition of the Transfer Fee. Premium taxes are not reflected.
3. For purposes of the amounts reported in the examples, the Records
Maintenance Charge is reflected by dividing the total amount of Records
Maintenance Charges anticipated to be collected during the year by the total
net assets of the Separate Account's Divisions and the related Fixed Account
assets.
4. NEITHER THE FEE TABLES NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7
<PAGE> 12
- --------------------------------------------------------------------------------
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SEPARATE ACCOUNT ------------------------------------------------------------------------------------------------------------
DIVISION 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Foreign Securities
Beginning AUV 3/23/87
(inception)...... $ 9.99 $ 8.70 $ 10.47 $ 13.32 $ 11.45 $ 11.26 $ 9.64 $ 12.39 $ 11.83 $ 13.13
End AUV............ $ 8.70 $ 10.47 $ 13.32 $ 11.45 $ 11.26 $ 9.64 $ 12.39 $ 11.83 $ 13.13 $ 14.43
End # AU's (000)... 1,344 1,449 2,978 2,875 2,623 2,878 5,512 5,328 3,704 3,043
Capital Appreciation
Beginning AUV 3/23/87
(inception)...... $ 9.99 $ 8.16 $ 9.80 $ 12.08 $ 9.97 $ 15.36 $ 19.09 $ 22.79 $ 21.62 $ 28.68
End AUV............ $ 8.16 $ 9.80 $ 12.08 $ 9.97 $ 15.36 $ 19.09 $ 22.79 $ 21.62 $ 28.68 $ 35.39
End # AU's (000)... 909 1,714 2,515 2,553 2,834 4,148 5,413 5,136 4,751 4,348
Growth
Beginning AUV...... $ 13.99 $ 13.88 $ 15.43 $ 19.79 $ 18.99 $ 26.36 $ 27.40 $ 29.12 $ 27.36 $ 34.08
End AUV............ $ 13.88 $ 15.43 $ 19.79 $ 18.99 $ 26.36 $ 27.40 $ 29.12 $ 27.36 $ 34.08 $ 42.03
End # AU's (000)... 14,899 12,043 7,998 7,465 8,053 9,030 8,345 5,853 5,375 4,556
Natural Resources
Beginning AUV 1/1/88
(inception)...... -- $ 10.00 $ 11.02 $ 12.86 $ 10.77 $ 11.13 $ 11.25 $ 15.11 $ 15.05 $ 17.43
End AUV............ -- $ 11.02 $ 12.86 $ 10.77 $ 11.13 $ 11.25 $ 15.11 $ 15.05 $ 17.43 $ 19.61
End # AU's (000)... -- 857 1,004 1,323 810 748 1,142 1,220 997 788
Growth and Income
Beginning AUV 3/23/87
(inception)...... $ 10.00 $ 8.65 $ 9.76 $ 11.04 $ 10.50 $ 13.12 $ 15.55 $ 18.70 $ 16.67 $ 19.16
End AUV............ $ 8.65 $ 9.76 $ 11.04 $ 10.50 $ 13.12 $ 15.55 $ 18.70 $ 16.67 $ 19.16 $ 22.69
End # AU's (000)... 1,611 1,636 1,446 1,184 1,034 1,424 2,057 1,915 1,521 1,346
Strategic
Multi-Asset
Beginning AUV 3/23/87
(inception)...... $ 10.00 $ 9.06 $ 10.26 $ 12.13 $ 11.06 $ 13.55 $ 13.88 $ 15.78 $ 15.16 $ 18.35
End AUV............ $ 9.06 $ 10.26 $ 12.13 $ 11.06 $ 13.55 $ 13.88 $ 15.78 $ 15.16 $ 18.35 $ 20.78
End # AU's (000)... 6,663 7,267 7,568 7,487 6,289 5,447 4,546 3,958 3,213 2,579
Multi-Asset
Beginning AUV 3/23/87
(inception)...... $ 10.02 $ 9.34 $ 10.09 $ 11.91 $ 11.93 $ 14.98 $ 15.97 $ 16.90 $ 16.39 $ 20.19
End AUV............ $ 9.34 $ 10.09 $ 11.91 $ 11.93 $ 14.98 $ 15.97 $ 16.90 $ 16.39 $ 20.19 $ 22.67
End # AU's (000)... 13,023 14,199 11,945 11,811 10,975 11,719 10,510 8,354 6,930 5,585
High Yield
Beginning AUV ..... $ 11.51 $ 11.53 $ 13.00 $ 12.48 $ 11.01 $ 14.44 $ 16.24 $ 19.07 $ 17.96 $ 21.03
End AUV............ $ 11.53 $ 13.00 $ 12.48 $ 11.01 $ 14.44 $ 16.24 $ 19.07 $ 17.96 $ 21.03 $ 23.17
End # AU's (000)... 4,490 4,212 2,361 1,791 2,247 2,813 4,000 2,489 2,088 1,872
Target '98
Beginning AUV 5/2/88
(inception)...... -- $ 10.00 $ 10.63 $ 12.29 $ 12.89 $ 15.11 $ 15.97 $ 17.52 $ 16.57 $ 18.72
End AUV............ -- $ 10.63 $ 12.29 $ 12.89 $ 15.11 $ 15.97 $ 17.52 $ 16.57 $ 18.72 $ 19.15
End # AU's (000)... -- 397 922 941 767 1,132 1,065 1,028 578 464
Fixed Income
Beginning AUV...... $ 14.37 $ 14.29 $ 15.08 $ 16.78 $ 17.84 $ 20.31 $ 21.34 $ 22.71 $ 21.67 $ 25.46
End AUV............ $ 14.29 $ 15.08 $ 16.78 $ 17.84 $ 20.31 $ 21.34 $ 22.71 $ 21.67 $ 25.46 $ 25.73
End # AU's (000)... 3,871 3,003 2,240 1,851 1,813 1,785 1,657 1,183 1,006 824
Government & Quality
Bond
Beginning AUV...... $ 13.91 $ 13.93 $ 14.95 $ 17.04 $ 18.15 $ 21.00 $ 22.13 $ 23.63 $ 22.60 $ 26.60
End AUV............ $ 13.93 $ 14.95 $ 17.04 $ 18.15 $ 21.00 $ 22.13 $ 23.63 $ 22.60 $ 26.60 $ 26.99
End # AU's (000)... 18,902 12,769 8,752 8,183 8,917 8,626 7,256 6,270 4,038 3,422
Money Market
Beginning AUV...... $ 11.42 $ 12.07 $ 12.78 $ 13.73 $ 14.61 $ 15.23 $ 15.53 $ 15.72 $ 16.10 $ 16.77
End AUV............ $ 12.07 $ 12.78 $ 13.73 $ 14.61 $ 15.23 $ 15.53 $ 15.72 $ 16.10 $ 16.77 $ 17.36
End # AU's (000)... 6,548 12,570 16,141 11,858 7,594 7,824 5,746 7,324 5,320 4,090
</TABLE>
- ------------------------------
AUV -- Accumulation Unit Value.
AU -- Accumulation Units.
8
<PAGE> 13
- --------------------------------------------------------------------------------
PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time the Separate Account may advertise its Money Market
Division's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Money Market Division refers to the net income generated for a
Contract funded by an investment in the Division over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, 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 Division is assumed
to be reinvested at the end of each seven-day period. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment. Neither the yield nor the effective yield takes into
consideration the effect of any capital changes that might have occurred during
the seven-day period, nor do they reflect the impact of premium taxes or any
Annuity Charges or Withdrawal Charges. The impact of other, recurring charges on
both yield figures is, however, reflected in them to the same extent it would
affect the yield (or effective yield) for a Contract of average size.
In addition, the Separate Account may advertise "total return" data for its
other Divisions. Like the yield figures described above, total return figures
are based on historical data and are not intended to indicate future
performance. The "total return" is a computed rate of return that, when
compounded annually over a stated period of time and applied to a hypothetical
initial investment in a Division made at the beginning of the period, will
produce the same Contract Value at the end of the period that the hypothetical
investment would have produced over the same period (assuming a complete
redemption of the Contract at the end of the period). Recurring Contract charges
are reflected in the total return figures in the same manner as they are
reflected in the yield data for Contracts funded through the Money Market
Division. The effect of applicable Withdrawal Charges due to the assumed
redemption will be reflected in the return figures, but may be omitted in
additional return figures given for comparison.
For a more complete description of Contract charges, see "Contract
Charges"; for a more detailed description of the performance data computations,
please refer to the Statement of Additional Information.
- --------------------------------------------------------------------------------
DESCRIPTION OF ANCHOR NATIONAL LIFE INSURANCE
COMPANY AND THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
COMPANY
The Company is a stock life insurance company originally organized under
the laws of the state of California in April 1965. On January 1, 1996, the
Company redomesticated under the laws of the state of Arizona. The principal
business address of the Company is 1 SunAmerica Center, Los Angeles, California
90067-6022. The Company is an indirect, wholly owned subsidiary of SunAmerica
Inc., a Maryland corporation.
The Company and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, CalAmerica Life Insurance Company, SunAmerica
National Life Insurance Company, SunAmerica Asset Management Corp., Imperial
Premium Finance, Inc., Resources Trust Company and four broker-dealers,
specializes in retirement savings and investment products and services,
including fixed and variable annuities, mutual funds, premium finance,
broker-dealer, and trust administration services. The Company is admitted to
conduct life insurance and annuity business in the District of Columbia and in
all states except New York. It intends to market the Contract in all
jurisdictions in which it is admitted to conduct annuity business.
The Company may from time to time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company
("A.M. Best"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Insurance Rating Services ("Standard & Poor's"), and Duff & Phelps. A.M. Best's
and Moody's ratings reflect their current opinion on the relative financial
strength and operating performance of an insurance company in comparison to the
norms of the life/health insurance industry. Standard & Poor's and Duff & Phelps
provide ratings which measure the claims-
9
<PAGE> 14
paying ability of insurance companies. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of its
insurance policies in accordance with their terms. Claims-paying ability ratings
do not refer to an insurer's ability to meet non-policy obligations (i.e.,
debt/commercial paper). These ratings do not apply to the Separate Account.
However, the contractual obligations under the Contracts are the general
corporate obligations of the Company.
The Contracts offered by this Prospectus are issued by the Company and will
be funded in the Separate Account, as well as in the Company's General Account.
REINSURANCE OF PREVIOUSLY ISSUED CONTRACTS
On November 13, 1989, SunAmerica Inc., the Company, Integrated Resources,
Inc. ("IRI") and Integrated Resources Life Insurance Company ("IR Life") entered
into an agreement which amended a stock purchase agreement dated November 1,
1989 (the "Stock Purchase Agreement") between SunAmerica Inc. and IRI. Under the
Stock Purchase Agreement, as amended, the Company acquired, on an assumption
reinsurance basis, the variable annuity contracts of IR Life, including
contracts which except for the issuer are identical in all material respects
("reinsured contracts") to the Contracts offered by this Prospectus. Thus, the
Company has all the liabilities and obligations under the reinsured contracts.
All future payments made under the reinsured contracts will be made directly to
or by the Company.
Reinsured Contract Owners have the same contract rights and the same
contract values as they did before the reinsurance transaction. However, they
will look to the Company instead of to IR Life to fulfill the terms of their
Contracts. Pursuant to the reinsurance agreement, the Separate Account
originally held by IR Life with all of its assets was transferred to the
Company. Thus, as of the effective date of the reinsurance closing, the assets
of the Separate Account are only available to satisfy the Company's obligations
under the variable annuity contracts issued by the Separate Account. The
Separate Account is not chargeable with liabilities out of any other business
that IR Life has conducted, and the assets of the Separate Account cannot be
reached by IRI or IRI's creditors. (See "Separate Account").
The Stock Purchase Agreement, as amended, also provided for the sale of
Integrated Resources Asset Management Corp. ("IRAM") to SunAmerica Inc. Such
transaction constituted a change in the control of IRAM. A change in the control
of IRAM constitutes an assignment of the Investment Management Agreement and
series of Investment Management Contracts between IRAM and the Trust, and the
Sub-Advisory Agreement and series of Sub-Advisory Contracts with Wellington
Management Company. (See "Anchor Series Trust"). These agreements and contracts
terminate automatically in the event of their assignment. New agreements were
approved by the Trust's Board of Trustees and by shareholders on February 13,
1990. In connection with the sale of IRAM to SunAmerica Inc., IRAM's name was
changed to SunAmerica Asset Management Corp. ("SAAM").
SEPARATE ACCOUNT
The Separate Account was originally established by IR Life pursuant to Iowa
insurance law on January 21, 1985. In fulfillment of the reinsurance agreement,
the Separate Account was assumed intact by the Company on January 18, 1990 and
reestablished under California insurance laws. In connection with the
redomestication of the Company, the establishment of the Separate Account was
ratified by the Company under Arizona insurance laws. The Separate Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. This registration does not
involve supervision of the management of the Separate Account or the Company by
the Securities and Exchange Commission.
On September 24, 1990, Variable Annuity Account One(c) ("Separate
Account(c)") was merged with and into the Separate Account. Separate Account(c)
was a separate account originally established by The Capitol Life Insurance
Company, a subsidiary of IRI, pursuant to Colorado insurance law on September
23, 1986, and used to fund variable annuity contracts ("Capitol Contracts") that
are in all material respects identical to the Contracts. The Capitol Contracts
were reinsured to IR Life and, on January 18, 1990, reinsured to the Company. As
a result of the merger, the reinsured Capitol Contracts are now funded through
the Separate Account. As is the case with the Contracts, the reinsured Capitol
Contracts were (and continue to be) ultimately funded by the Portfolios of the
Trust and by the General Account of the Company. The merger did not affect any
of the rights and obligations of the
10
<PAGE> 15
reinsured Capitol Contract Owners and the Company under the reinsured Capitol
Contracts or those of Contract Owners and the Company under the Contracts. Nor
did the merger affect those Owners' Contract Values.
The assets of the Separate Account are the property of the Company.
However, the assets of the Separate Account, equal to the reserves and other
contract liabilities of the Separate Account, are not chargeable with
liabilities arising out of any other business the Company may conduct. The
Company's obligations arising under the Contracts are general corporate
obligations of the Company.
Income, gains and losses, whether or not realized, from assets allocated to
the Separate Account are credited to or charged against the Separate Account
without regard to other income, gains or losses of the Company.
The Separate Account is divided into Divisions, with the assets of each
Division invested in the shares of one of the eleven Portfolios of the Trust.
The Company does not guarantee the investment performance of the Separate
Account or its Divisions. Values allocated to the Separate Account and the
amount of variable annuity payments will vary with the value of shares of the
Portfolios and the Contract charges. The Separate Account has also been
segmented into subaccounts which fund group annuity contracts issued by the
Company.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Financial statements of the Separate Account appear in the Statement of
Additional Information. Financial information regarding the General Account is
reported in the Company's financial statements. The Company's financial
statements are also included in the Statement of Additional Information. A copy
of the Statement of Additional Information may be obtained by contacting the
Company, c/o its Administrative Service Center.
- --------------------------------------------------------------------------------
ANCHOR SERIES TRUST
- --------------------------------------------------------------------------------
Each of the eleven Divisions of the Separate Account invests solely in the
shares of one of the eleven Portfolios of the Trust. The Trust is an open-end
diversified management investment company registered under the Investment
Company Act of 1940. While a brief summary of the investment objectives is set
forth below, more comprehensive information, including a discussion of potential
risks, is found in the Prospectus for the Trust. Additional copies of this
Prospectus, the Trust's Prospectus and the Statement of Additional Information
can be obtained by calling the Administrative Service Center number on the cover
page of this Prospectus. Both Prospectuses should be read carefully before
investing to understand all aspects of the Contract, the Separate Account and
the Portfolios. SAAM, an affiliate of the Company, is the investment manager for
the Trust. Wellington Management Company, LLP ("WMC"), which is not affiliated
with the Company, serves as sub-adviser for the Trust. (See the Trust Prospectus
for information concerning the investment management fees.)
The eleven Portfolios and their investment objectives are:
EQUITY PORTFOLIOS
FOREIGN SECURITIES PORTFOLIO seeks long-term capital appreciation. This
Portfolio will invest primarily in a diversified group of equity securities
issued by foreign companies and primarily denominated in foreign currencies.
CAPITAL APPRECIATION PORTFOLIO seeks long-term capital appreciation. This
Portfolio will invest in growth equity securities which are widely diversified
by industry and company and may engage in transactions involving stock index
futures and options thereon as a hedge against changes in market conditions.
GROWTH PORTFOLIO seeks long-term capital appreciation through investments
in growth equity securities. This Portfolio may engage in transactions involving
stock index futures and options thereon as a hedge against changes in market
conditions.
NATURAL RESOURCES PORTFOLIO seeks a total return in excess of the U.S. rate
of inflation as represented by the Consumer Price Index. This Portfolio will
invest primarily in equity securities of U.S. or foreign companies which are
expected to provide favorable returns in periods of rising inflation.
11
<PAGE> 16
GROWTH AND INCOME PORTFOLIO seeks high current income and long-term capital
appreciation. This Portfolio will invest primarily in securities that provide
the potential for growth and offer income, such as dividend-paying stocks and
securities convertible into common stock. This Portfolio may also engage in
transactions involving stock index futures and options thereon as a hedge
against changes in market conditions.
MANAGED PORTFOLIOS
STRATEGIC MULTI-ASSET PORTFOLIO seeks high long-term total investment
return. This Portfolio will invest in a diversified group of securities of the
following types: growth equity and aggressive growth equity securities,
including the securities of smaller companies which may be newer and less
seasoned, investment grade and high-yield, high-risk bonds, international
securities and money market instruments. The Portfolio may also engage in
transactions involving stock index futures contracts and options thereon, and
Financial Futures Contracts and options thereon, as a hedge against changes in
market conditions.
MULTI-ASSET PORTFOLIO seeks long-term total investment return consistent
with moderate investment risk. This Portfolio will invest in a diversified group
of securities, including: growth equity securities, convertible securities,
investment grade fixed income securities and money market securities. The
Portfolio also may engage in transactions involving stock index futures
contracts and options thereon, and Financial Futures Contracts and options
thereon, as a hedge against changes in market conditions.
FIXED INCOME PORTFOLIOS
HIGH YIELD PORTFOLIO seeks high current income. A secondary investment
objective is capital appreciation. This Portfolio will seek its objectives by
investing, except for temporary defensive purposes, at least 65% of its assets
in high-yielding, high-risk, income producing corporate bonds, which generally
carry ratings lower than those assigned to investment grade bonds by Moody's or
Standard & Poor's, or which are unrated. This Portfolio may also engage in
transactions involving Financial Futures Contracts and options thereon as a
hedge against changes in market conditions. High-yield, high-risk bonds
typically are subject to greater risks than are investments in lower-yielding,
higher-rated bonds. See the Trust's Prospectus for more information.
FIXED INCOME PORTFOLIO seeks high level of current income consistent with
preservation of capital. This Portfolio will invest primarily in investment
grade, fixed income securities and may engage in Financial Futures Contracts and
options thereon as a hedge against changes in market conditions.
GOVERNMENT AND QUALITY BOND PORTFOLIO seeks relatively high current income,
liquidity and security of principal. This Portfolio will invest in obligations
issued, guaranteed or insured by the U.S. Government, its agencies or
instrumentalities and in corporate debt securities rated Aa or better by Moody's
or AA or better by Standard & Poor's.
MONEY MARKET PORTFOLIO seeks current income consistent with stability of
principal through investment in a diversified portfolio of money market
instruments maturing in 397 days or less. The Portfolio will maintain a dollar-
weighted average portfolio maturity of not more than 90 days.
There is no assurance that the investment objective of any of the
Portfolios will be met. Contract Owners bear the complete investment risk for
Purchase Payments allocated to a Division. Contract Values will fluctuate in
accordance with the investment performance of the Division(s) to which Purchase
Payments are allocated, and in accordance with the imposition of the fees and
charges assessed under the Contracts.
Shares of the Trust are and will be issued and redeemed only in connection
with investments in and payments under variable contracts sold by the Company
and its affiliate, First SunAmerica Life Insurance Company, as well as two
unaffiliated companies, Presidential Life Insurance Company and Phoenix Mutual
Life Insurance Company. No disadvantage to Contract Owners is seen to arise from
the fact that the Trust offers its shares in this fashion.
Additional Portfolios may be established by the Trust from time to time and
may be made available to Contract Owners. However, there is no assurance that
this will occur.
12
<PAGE> 17
CONTRACT OWNERS IN TARGET '98 PORTFOLIO
As of January 1, 1998, no Purchase Payments or transfers into the Target
'98 Division are being accepted. Purchase Payments may be allocated among the
other eleven Divisions of the Separate Account and/or Fixed Account option.
Contract Owners currently in the Target '98 Division must provide the
Company with reallocation instructions before November 15, 1998. If the Company
does not receive reallocation instructions before November 15, 1998, Contract
Values will be automatically reallocated to the Money Market Division.
Reallocations of Contract Values from the Target '98 Division will not be
considered "transfers" for purposes of determining any applicable transfer fees.
Other transfers out of the Target '98 Division will not be permitted after
October 15, 1998. None of the foregoing constraints affect a Contract Owner's
right to redeem his or her Contract Value at any time (See "Purchases and
Contract Value -- Withdrawals (Redemption)").
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will
vote the shares of the Trust held in the Separate Account at special meetings of
the shareholders of the Trust in accordance with instructions received from
persons having the voting interest in the Separate Account. The Company will
vote shares for which it has not received instructions in the same proportion as
it votes shares for which it has received instructions. The Trust does not hold
regular meetings of shareholders.
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 60 days prior to the
meeting of the Trust's shareholders. Voting instructions will be solicited by
written communication at least 14 days prior to such meeting. The person having
such voting rights will be the Contract Owner before the Annuity Date or the
death of the Annuitant; thereafter the payee entitled to receive payments under
the Contract. Voting rights attributable to a Contract will generally decrease
as Contract Values decrease.
SUBSTITUTION OF SECURITIES
If the shares of any of the Portfolios should no longer be available for
investment by the Separate Account or if, in the judgment of the Company's Board
of Directors, further investment in the shares of a Portfolio is no longer
appropriate in view of the purpose of the Contract, the Company may substitute
shares of another open-end management investment company (or series thereof) for
Portfolio shares already purchased or to be purchased in the future by Purchase
Payments under the Contract. No substitution of securities may take place
without prior approval of the Securities and Exchange Commission and under such
requirements as it may impose.
- --------------------------------------------------------------------------------
CONTRACT CHARGES
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a risk charge from each Division of the Separate
Account during each Valuation Period. The risk charge is equal, on an annual
basis, to 1.25% of the daily net asset value of each Division (approximately
.90% is for mortality risks and approximately .35% is for expense risks). The
mortality risks assumed by the Company arise from its contractual obligations to
make annuity payments after the Annuity Date for the life of the Annuitant(s),
to waive the Withdrawal 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 Separate
Account will exceed the amount received from the Records Maintenance Charge and
the Administrative Expense Charge. (See "Administrative Charges"). This charge
is guaranteed by the Company and cannot be increased.
13
<PAGE> 18
ADMINISTRATIVE CHARGES
ADMINISTRATIVE EXPENSE CHARGE
The Company deducts an Administrative Expense Charge from each Division of
the Separate Account which is equal, on an annual basis, to .15% of the daily
net asset value of each Division. This charge is designed to cover those
administrative expenses which exceed the revenues from the Records Maintenance
Charge. The Company does not intend to profit from this charge. The Company
believes that the Administrative Expense Charge has been set at a level that
will recover no more than the actual costs associated with administering the
Contract. In the event that it exceeds the amount necessary to reimburse the
Company for its administrative expenses the charge will be appropriately
reduced. In no event will this charge be increased. The Administrative Expense
Charge is assessed during both the Accumulation Period and the Annuity Period.
RECORDS MAINTENANCE CHARGE
An annual Records Maintenance Charge of $30 is charged against each
Contract. The amount of this charge is guaranteed and cannot be increased by the
Company. This charge reimburses the Company for expenses incurred in
establishing and maintaining records relating to a Contract.
For Contracts issued prior to September 1, 1987, the Records Maintenance
Charge will be assessed on December 31 of each calendar year. The charge will be
waived for such Contracts during the year in which Contract Value is totally
surrendered.
For Contracts issued on or after September 1, 1987, the Records Maintenance
Charge will be assessed each Contract Year on the anniversary of the Issue Date
of the Contract. In the event that a total surrender of Contract Value is made,
the Charge will be assessed as of the date of surrender without proration.
SALES CHARGES
The Withdrawal Charge and the Annuity Charge are sales charges.
WITHDRAWAL CHARGE
Effective January 1, 1989, federal tax law limits withdrawals from annuity
contracts issued in connection with 403(b) Qualified Plans. Subject to those
limitations, the Contract Value may be withdrawn at any time during the
Accumulation Period. Contract Owners should consult their own tax counsel or
other tax adviser regarding any withdrawals. (See "Taxes -- Tax Treatment of
Withdrawals -- Non-Qualified Contracts" and "Taxes -- Tax Treatment of
Withdrawals -- Qualified Contracts").
There is a Free Withdrawal Amount which applies to the first withdrawal
during a Contract Year after the first Contract Year. The Free Withdrawal Amount
is equal to 10% of the aggregate Purchase Payments less prior withdrawals.
Alternatively, certain Owners of Non-Qualified Contracts and Contracts issued in
connection with IRAs may choose to withdraw amounts which in the aggregate add
up to 10% of their initial Purchase Payments annually pursuant to the Systematic
Withdrawal Program without charge. The Systematic Withdrawal Program is
available under such Contracts which were issued on and after April 1, 1989. To
participate in the Systematic Withdrawal Program, Owners must complete an
enrollment form which describes the program and send it to the Company, c/o its
Administrative Service Center. Depending on fluctuations in the net asset value
of the Separate Account's Divisions, systematic withdrawals may reduce or even
exhaust Contract Value. (See "Purchases and Contract Value -- Systematic
Withdrawal Program").
A contingent deferred sales charge, which is referred to as the Withdrawal
Charge, may be imposed upon other withdrawals. Withdrawal Charges will vary in
amount depending upon the Contribution Year in which the Purchase Payment being
withdrawn was made, and will be calculated based on the Withdrawal Charge Table,
below, and the amount of Purchase Payment withdrawn which is still subject to
the Withdrawal Charge and not previously withdrawn. The Withdrawal Charge is
deducted from remaining Contract Value so that the actual reduction in Contract
Value as a result of the withdrawal will be greater than the withdrawal amount
requested and paid. Free withdrawals and other withdrawals will be allocated to
Purchase Payments on a first-in-first-out basis so that all withdrawals are
allocated to Purchase Payments to which the lowest Withdrawal Charge, if any,
applies.
14
<PAGE> 19
WITHDRAWAL CHARGE TABLE
<TABLE>
<CAPTION>
APPLICABLE WITHDRAWAL
CONTRIBUTION YEAR CHARGE PERCENTAGE
------------------------------------------------------------- ---------------------
<S> <C>
First........................................................ 5%
Second....................................................... 4%
Third........................................................ 3%
Fourth....................................................... 2%
Fifth........................................................ 1%
Sixth and later.............................................. 0%
</TABLE>
Where legally permitted, the Withdrawal Charge will be eliminated when a
Contract is issued to an officer, director or employee of the Company or its
affiliates, or an immediate family member of such person. In addition, the
Withdrawal Charge may be waived by the Company on withdrawals where the amount
withdrawn is used to purchase another annuity contract issued by the Company.
Additional information regarding the elimination or waiver of the Withdrawal
Charge may be obtained by contacting the Company.
The amounts obtained from the Withdrawal Charge will be used to pay sales
commissions and other promotional or distribution expenses associated with the
marketing of the Contracts. To the extent that the Withdrawal Charge is
insufficient to cover all sales commissions and other promotional or
distribution expenses, the Company may use any of its corporate assets,
including potential profit which may arise from the Mortality and Expense Risk
Charge, (See "Contract Charges -- Mortality and Expense Risk Charge"), to make
up any difference.
ANNUITY CHARGE
If a Contract Owner elects to have annuity payments made under annuity
option 1, Life Income with Installments Guaranteed or annuity option 2, Joint
and Survivor Annuity (See "Annuity Period -- Annuity Options"), no Annuity
Charge applies and 100% of Contract Value, less any premium tax, is applied.
If a Contract Owner elects annuity option 3, Income for a Specified Period,
and if Purchase Payments were made in the Contract Year in which annuity
payments are to begin or any of the four preceding Contract Years, an Annuity
Charge may apply. This Annuity Charge equals the Withdrawal Charge that would
apply if the Contract were being surrendered. Further, no Annuity Charge will be
assessed if annuity option 3 is elected by a Beneficiary under the Death
Benefit.
The Annuity Charge also applies to certain annuitizations of Contract
Values allocated to the General Account.
PREMIUM TAXES
Premium taxes or other taxes payable to a state or other governmental
entity will be charged against the Contract Values. Some states assess premium
taxes at the time Purchase Payments are made; others assess premium taxes at the
time of surrender or when annuity payments begin. The Company currently intends
to deduct premium taxes at the time of surrender, upon death of the Owner or
upon annuitization; however, it reserves the right to deduct premium taxes when
incurred. Premium taxes generally range from 0% to 3.5%.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
While the Company is not currently maintaining a provision for taxes, the
Company has reserved the right to establish such a provision for taxes in the
future if it determines in its sole discretion, that it will incur a tax as a
result of the operation of the Separate Account. The Company will deduct for any
taxes incurred by it as a result of the operation of the Separate Account
whether or not there was a provision for taxes and whether or not it was
sufficient. (See "Taxes").
OTHER EXPENSES
There are other deductions from and expenses paid out of the assets of the
Trust which are described in the accompanying Trust Prospectus.
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<PAGE> 20
REDUCTION OF CHARGES FOR SALES TO CERTAIN GROUPS
The Company may reduce the charges on individual Contracts sold to certain
groups of individuals, or to a trustee, employer or other entity representing a
group, where it is expected that such sales will result in savings of sales or
administrative expenses. The Company determines the eligibility of groups for
such reduced charges, and the amount of such reductions for particular groups,
by considering the following factors: (1) the size of the group; (2) the total
amount of Purchase Payments expected to be received from the group; (3) the
nature of the group for which the Contracts are purchased, and the persistency
expected in that group; (4) the purpose for which the Contracts are purchased
and whether that purpose makes it likely that expenses will be reduced; and (5)
any other circumstances which the Company believes to be relevant to determining
whether reduced sales or administrative expenses may be expected. None of the
reductions in charges for group sales is contractually guaranteed. Such
reductions may be withdrawn or modified by the Company on a uniform basis. The
Company's reductions in charges for group sales will not be unfairly
discriminatory to the interests of any Contract Owners.
- --------------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
TRANSFER DURING ACCUMULATION PERIOD
During the Accumulation Period, the Contract Owner, or his or her agent,
may transfer Contract Values among Divisions and/or the General Account, by
written request or by telephone authorization. Telephone transfers are
automatically accepted unless the Contract Owner elects to not permit telephone
transfers on the Contract application or the Company is otherwise instructed by
the Contract Owner. The Company has in place procedures which are designed to
provide reasonable assurance that telephone authorizations are genuine,
including tape recording all telephone communications and requesting identifying
information. Accordingly, the Company and its affiliates disclaim all liability
for any claim, loss or expense resulting from any alleged error or mistake in
connection with a telephone transfer which was not properly authorized by the
Contract Owner. However, if the Company fails to employ reasonable procedures to
ensure that all telephone transfers are properly authorized, the Company may be
held liable for such losses. The Company reserves the right to modify or
discontinue at any time and without notice the use of telephone transfers and
acceptance of telephone transfers from someone other than the Contract Owner.
Telephone calls authorizing transfers must be completed by 4:00 p.m. Eastern
time in order to effect the transfer the day of receipt. All other transfers
will be processed on the next business day.
Transactions effecting transfer may not be made more than fifteen times in
any Contract Year without charge. A charge of $25 per transaction is assessed
($10 in Texas and Pennsylvania) against any transaction effecting transfer in
excess of the fifteen permitted without charge in any Contract Year or, if all
or part of a Contract Owner's interest in a Division is transferred to another
Division, within 30 days of the Issue Date. Transfers made under the Dollar Cost
Averaging Program, described below, are counted against this limitation in the
same manner as other transfers. The fee will be deducted from Contract Values
which remain in the Division from which the transfer was made. If the remaining
Contract Value is insufficient to pay the transfer fee, then the fee will be
deducted from transferred Contract Values. The transfer fee is at cost with no
margin included for profit. The transfer fee may be waived, under certain
circumstances, in connection with pre-approved transfer programs.
This transfer privilege may be suspended, modified or terminated at any
time without notice. (See "Taxes -- Diversification").
The minimum partial transfer amount is $500. No partial transfer may be
made if the value of the Contract Owner's interest in the Division from which a
transfer is being made would be less than $500 after the transfer. As with
initial Purchase Payments, at least $500 must be allocated to a Division before
another Division is selected. These dollar amounts are subject to change at the
Company's option. The Company may waive the minimum partial transfer amount in
connection with pre-authorized automatic transfer programs.
Any amounts allocated or transferred to the General Account may only be
transferred from the General Account once each Contract Year during the 30-day
period following the anniversary of such allocation or transfer. If a transfer
request is received prior to the anniversary of an allocation or transfer, then
the transfer will take effect on the next Valuation Date following the
anniversary if the anniversary is not a Valuation Date. If the Company receives
the transfer request within the 30 days following the anniversary of an
allocation or transfer to the General
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<PAGE> 21
Account, the transfer will be effective on the next following Valuation Date.
The foregoing limitations may be waived in connection with pre-authorized
automatic transfer programs.
AUTOMATIC DOLLAR COST AVERAGING PROGRAM
Contract Owners who wish to purchase units of the Separate Accounts over a
period of time may be able to do so through the Dollar Cost Averaging ("DCA")
Program. Under this DCA Program, a Contract Owner may authorize the automatic
transfer of a fixed dollar amount ($100 minimum) or percentage of his or her
choice at regular intervals from either the Money Market Portfolio, Government
and Quality Bond Portfolio or the General Account to one or more of the Separate
Accounts (other than the Money Market Portfolio or the Government and Quality
Bond Portfolio) at the unit values determined on the dates of the transfers. The
intervals between transfers from the Money Market Portfolio or Government and
Quality Bond Portfolio may be monthly, quarterly, semi-annually or annually, at
the option of the Contract Owner. Transfers from the General Account must be
made by percentage and at quarterly intervals only and are limited to 8% of the
value of the Contract Owner's interest in the General Account in any Contract
Year. The theory of dollar cost averaging is that greater numbers of units are
purchased at times when the unit prices are relatively low than are purchased
when the prices are higher. This has the effect of reducing the aggregate
average cost per unit to less than the average of the unit prices on the same
purchase dates. However, participation in the DCA Program does not assure the
Contract Owner of a greater profit, or any profit, from his or her purchases
under the DCA Program; nor will it prevent or necessarily alleviate losses in a
declining market.
Although the various options under the DCA Program will allow transfers to
be made either from the Money Market Portfolio, Government and Quality Bond
Portfolio or the General Account, a Contract Owner must elect to have the
transfers made exclusively from one or the other of these three sources. A
Contract Owner may elect to increase, decrease or change the frequency or amount
of Purchase Payments under a DCA Program. The application and any Purchase
Payments should be sent to the Company, c/o its Administrative Service Center
for correspondence accompanied by payments. The Company reserves the right to
modify, suspend or terminate the DCA Program at any time.
A Contract Owner may not simultaneously participate in both the DCA Program
and the Systematic Withdrawal Program. Participation in the DCA Program will be
effective one week after the Company has received and approved the application
to participate in the DCA Program.
MODIFICATION OF THE CONTRACT
Only the Company's President or Secretary may approve a change or waive the
provisions of the Contract. Any change or waiver must be in writing. No agent
has the authority to change or waive the provisions of the Contract.
ASSIGNMENT
Contracts issued pursuant to Non-Qualified Plans that are not subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") may be
assigned by the Owner at any time during the lifetime of the Annuitant prior to
the Annuity Date. The Company will not be bound by any assignment until written
notice is received by the Company, c/o its Administrative Service Center. The
Company is not responsible for the validity, tax or other legal consequences, of
any assignment. An assignment will not affect any payments the Company may make
or actions it may take before it receives notice of the assignment.
If the Contract is issued pursuant to a Qualified Plan (or a Non-Qualified
Plan that is subject to Title I of ERISA), it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
BECAUSE AN ASSIGNMENT MAY BE A TAXABLE EVENT, CONTRACT OWNERS SHOULD
CONSULT COMPETENT TAX ADVISERS SHOULD THEY WISH TO ASSIGN THEIR CONTRACTS.
DEATH OF OWNER OF NON-QUALIFIED CONTRACT
The following section applies only if the Contract is issued on a
Non-Qualified basis and if either of the two following conditions exists:
17
<PAGE> 22
(A) The Owner and the Annuitant are the same individual and that
individual dies during the Accumulation Period; or
(B) The Owner and Annuitant are different persons and the Owner dies
during the Accumulation Period prior to the Annuitant's death.
If either of the above conditions occurs, the following provisions apply:
(1) If the Beneficiary is the spouse of the Owner, then the
Beneficiary may elect to become the Owner and maintain the Contract in full
force and effect. A spouse Beneficiary may alternatively choose to take a
lump sum distribution. (See below).
(2) If the Beneficiary is a natural person and not the spouse of the
Owner, the Beneficiary can elect to have the existing Contract Value paid
under one of the annuity options set forth in the Contract over a period
not extending beyond the life expectancy of the Beneficiary at the time of
the election, or such a Beneficiary can elect to take a lump sum
distribution. (See below). Payments under any annuity option selected must
begin not later than one year after the date of death of the Owner.
(3) If there is no Beneficiary or if the Beneficiary is not a natural
person, then the entire Contract Value must be paid out within five years
of the Owner's death.
The amount of a lump sum distribution is the greater of:
(1) the current Contract Value at the time of election; or
(2) the total amount of Purchase Payments made under the Contract less
the aggregate dollar amount of any partial withdrawals and any Withdrawal
Charges which were assessed at the time of withdrawal. Under this
alternative election, the lump sum must be paid to the Beneficiary within
five years of the Owner's death.
If the Contract is issued pursuant to a Qualified Plan, similar provisions
will apply upon the death of the Contract Owner. Purchasers acquiring Contracts
pursuant to Qualified Plans should consult a qualified pension or tax adviser.
DEATH BENEFIT
If the Annuitant dies during the Accumulation Period, a Death Benefit will
be payable to the Beneficiary upon receipt by the Company of Due Proof of Death
of the Annuitant.
The Death Benefit is equal to the greater of:
(1) the Contract Value at the end of the Valuation Period during which
Due Proof of Death and an election of the type of payment to the
Beneficiary is received by the Company, c/o its Administrative Service
Center; or
(2) the total dollar amount of Purchase Payments minus:
(a) any partial withdrawals;
(b) all Contract Owner transaction expenses deducted during the
term of the Contract prior to the date of death; and
(c) any partial annuitizations,
all accumulated annually at 5% at the date of death; or
(3) after the fifth Contract Year, the Contract Value at the last
anniversary of the Issue Date of the Contract minus the total dollar amount
of partial withdrawals and/or partial annuitizations made since that
anniversary.
Payment of the Death Benefit may be made in one lump sum or applied under
one of the annuity options.
BENEFICIARY
The Contract Owner may designate the Beneficiary(ies) to receive any amount
payable on death. However, where a Contract is jointly owned, each joint Owner
shall be a primary Beneficiary. The original Beneficiary(ies) will be named in
the application. Unless an irrevocable Beneficiary(ies) designation was
previously filed or unless the Contract is jointly owned, the Contract Owner may
change the Beneficiary(ies) prior to the Annuity Date by written request
delivered to the Company, c/o its Administrative Service Center, or by
completing a Change of Beneficiary
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<PAGE> 23
Form provided by the Company. Any change will take effect when recorded by the
Company. The Company is not liable for any payment made or action taken before
it records the change.
- --------------------------------------------------------------------------------
ANNUITY PERIOD
- --------------------------------------------------------------------------------
ANNUITY DATE
The Contract Owner selects an Annuity Date (the date on which annuity
payments are to begin) at the time of application. The Annuity Date must always
be the first day of a calendar month and must be at least one month after the
Issue Date. Annuity payments will begin no later than the first day of the
calendar month following the Annuitant's 85th birthday. Where joint Annuitants
are named, the Annuity Date may not be later than the first of the month
following the 85th birthday of the youngest Annuitant. The Contract Owner may
change the Annuity Date at any time at least seven days prior to the Annuity
Date then indicated on the Company's records by written notice to the Company,
c/o its Administrative Service Center.
The actual dollar amount of variable annuity payments is dependent upon:
(1) the Contract Value at the time of annuitization; (2) the annuity table
specified in the Contract; (3) the annuity option selected; and (4) the
investment performance of the Divisions selected. In addition, if annuity option
3, Income for a Specified Period, is elected, an Annuity Charge may apply. (See
"Contract Charges -- Sales Charges" and "Contract Charges -- Annuity 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. If a higher assumed investment rate were used, the initial payment
would be higher, but the actual net investment rate would have to be higher in
order for annuity payments to increase.
The Annuitant receives the value of a fixed number of Annuity Units each
month. The value of a fixed number of Annuity Units will reflect the investment
performance of the Divisions elected, and the amount of each annuity payment
will vary accordingly.
ALLOCATION OF ANNUITY PAYMENTS
If all of the Contract Value on the seventh calendar day before the Annuity
Date is allocated to the General Account, the Annuity will be paid as a fixed
annuity. If all of the Contract Value on that date is allocated to the Separate
Account, the Annuity will be paid as a Variable Annuity. If the Contract Value
on that date is allocated to both the General Account and the Separate Account,
the Annuity will be paid as a combination of a fixed annuity and a Variable
Annuity to reflect the allocation between the accounts. Variable Annuity
payments will reflect the investment performance of the Separate Account
Divisions. The payee(s) may, by written notice to the Company, convert Variable
Annuity payments to fixed annuity payments. However, fixed annuity payments may
not be converted to Variable Annuity payments.
ANNUITY OPTIONS
The Contract Owner, or any Beneficiary who is so entitled, may elect to
receive a lump sum at the end of the Accumulation Period. However, a lump sum
distribution may be deemed to be a withdrawal, and at least a portion of it may
be subject to federal income tax. (See "Taxes -- Tax Treatment of
Withdrawals -- Non-Qualified Contracts" and "Tax Treatment of
Withdrawals -- Qualified Contracts"). Alternatively, an annuity option may be
elected. The Contract Owner may elect an annuity option or change an annuity
option at any time during the lifetime of the Annuitant prior to the Annuity
Date. The Annuitant may make the election on the Annuity Date unless the
Contract Owner has restricted the right to make such an election. The
Beneficiary may elect an annuity option upon the Annuitant's death unless the
Contract Owner has restricted this right.
If no other annuity option is elected, monthly annuity payments will be
made in accordance with annuity option 1 below with a 10 year period certain.
Generally, annuity payments will be made in monthly installments. However, if
the amount available to apply under an annuity option is less than $5,000, and
state law permits, the Company has the right to pay the annuity in one lump sum.
In addition, if the first payment provided would be less
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<PAGE> 24
than $50, and state law permits, the Company shall have the right to change the
frequency of payments to be at quarterly, semi-annual or annual intervals so as
to result in an initial payment of at least $50.
Contract Owners may elect to have annuity payments electronically wired to
his or her financial institution by completing the instructions on the
Electronic Fund Transfer Form or by written request delivered to the Company at
its Administrative Service Center. A voided check (for checking accounts), the
account number and bank ABA number must accompany all requests. Electronic
transfers may also be requested on the Annuity Option Selection Form. The
Company reserves the right to modify, suspend or terminate the availability of
electronic fund transfers at any time.
The following annuity options are generally available under the Contract.
However, there may be restrictions in the retirement plan pursuant to which a
Contract issued on a qualified basis has been purchased.
OPTION 1 -- LIFE INCOME WITH INSTALLMENTS GUARANTEED
An annuity payable monthly during the lifetime of the payee. Upon election
a guaranteed payment period of either 10 years or 20 years may be chosen. If the
payee dies before the end of the guaranteed period, the present value, based on
a 5% annual interest rate, of any remaining guaranteed payments will be paid to
the payee's estate or to the Beneficiary.
OPTION 2 -- JOINT AND SURVIVOR ANNUITY
An annuity payable monthly while both payees are living. Upon the death of
either payee, the monthly income payable will continue during the lifetime of
the surviving payee at the percentage of the full amount chosen at the time of
election of this annuity option. This is the automatic form of annuity where
joint Annuitants are named, but a different option may be elected.
Annuity payments terminate automatically and immediately upon the death of
the surviving payee without regard to the number or total amount of payments
received.
There is no minimum number of guaranteed payments and it is possible to
have only one annuity payment if both payees die before the due date of the
second payment.
No Annuity Charge applies if either option 1 or option 2 is elected.
OPTION 3 -- INCOME FOR A SPECIFIED PERIOD
If Purchase Payments were made in the Contract Year in which annuity
payments are to begin or in any of the four preceding Contract Years, an Annuity
Charge may apply. The Annuity Charge equals the Withdrawal Charge that would
apply if the Contract were being surrendered. No Annuity Charge will be assessed
if annuity option 3 is elected by a Beneficiary under the Death Benefit.
Under this option, a payee can elect an annuity payable monthly for any
period of years from 5 to 30. This election must be made for full 12 month
periods. In the event the payee dies before the specified number of payments has
been made, the Beneficiary may elect to continue receiving the scheduled
payments or may alternatively elect to receive the present value, based on a 5%
annual interest rate, of any remaining guaranteed payments. Because Contract
Values are redeemable even after the Annuity Date under this option at any time
while payments are being made, the payee may elect to receive the present value
of the remaining payments, commuted at the interest rate used to create the
annuity factor for this option.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. (See "Contract
Charges -- Mortality and Expense Risk Charge"). Since annuity option 3, Income
for a Specified Period, does not contain an element of mortality risk, the payee
is not getting the benefit of this Charge. There shall be no right to terminate
the Contract during the Annuity Period if the option elected contains an element
of mortality risk.
OTHER OPTIONS
At the sole discretion of the Company, other annuity options may be made
available to the Contract Owner. However, to the extent that Withdrawal Charges
would otherwise apply to a withdrawal or termination, the identical Withdrawal
Charge may apply with respect to any additional options.
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With respect to Contracts issued under Sections 401, 403(b) or 408 of the
Code, any payments will be made only to the Annuitant and the Annuitant's
spouse.
TRANSFER DURING ANNUITY PERIOD
During the Annuity Period, the payee has the sole right to transfer the
Contract Value to the General Account and/or among Separate Account Divisions by
written request to the Company. The following limitations apply:
(1) No transfer to a Separate Account Division may be made during the
first year of the Annuity Period. Thereafter, only one transfer per
Division is permitted during each Contract Year of the Annuity Period.
(2) The entire value in a Separate Account Division must be
transferred.
(3) The request for transfer must be received by the Company, c/o its
Administrative Service Center, during the 45 days preceding the anniversary
of the Contract's Issue Date. The transfer will be effected at the next
Annuity Unit value calculation after receipt of a valid transfer request
which meets the limitations and conditions as are prescribed for transfers
during the Accumulation Period. (See "Transfer During Accumulation
Period").
(4) The amount allocated to the General Account in the event of a
transfer from a Separate Account Division will be equal to the annuity
reserve for the payee's interest in that Separate Account Division. The
annuity reserve is the product of "(A)" multiplied by "(B)" multiplied by
"(C)", where "(A)" is the number of Annuity Units representing the payee's
interest in the Separate Account Division per annuity payment; "(B)" is the
Annuity Unit value for the Separate Account Division; and "(C)" is the
present value of $1.00 per payment period as of the adjusted age of the
payee attained at the time of transfer, determined by using the 1983 Table
A, projected at Scale G with interest at the rate of 5% per annum. Amounts
transferred to the General Account will be applied under the annuity option
originally elected, except that adjustment will be made for the time
elapsed since the Annuity Date. All amounts and Annuity Unit values will be
determined as of the end of the Valuation Period preceding the effective
date of transfer.
(5) The transfer privilege may be suspended or discontinued at any
time.
DEATH BENEFIT DURING ANNUITY PERIOD
If the payee dies after the Annuity Date while the Contract is in force,
the death proceeds, if any, will depend upon the annuity option in effect at the
time of the payee's death. If the Owner or Annuitant, if different, dies after
the Annuity Date and before the entire interest in the Contract has been
distributed, the remaining interest, if any, as provided for in the annuity
option elected will be distributed at least as rapidly as under the method of
distribution in effect at the Owner's or Annuitant's death.
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PURCHASES AND CONTRACT VALUE
- --------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENT
The minimum initial Purchase Payment for Contracts issued pursuant to a
Non-Qualified Plan is $1,000. Minimum additional Purchase Payments may be made
in amounts of $500. The minimum Purchase Payment for a Contract issued pursuant
to a Qualified Plan is $100. A minimum of $500 must be allocated to one Division
or the General Account before transfers are permitted. (See "Description of the
Contracts -- Transfer During Accumulation Period"). The Company reserves the
right to refuse any Purchase Payment at any time.
MAXIMUM PURCHASE PAYMENT
Purchase Payments of more than $1,000,000 require prior Company approval.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments are allocated to the General Account and/or the Divisions
of the Separate Account selected by the Contract Owner. The current General
Account allocation option pays a fixed rate of interest declared by the
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<PAGE> 26
Company for one year from the date amounts are allocated to it. The Company, at
its discretion, may offer other General Account allocation options which are
subject to different terms and conditions than apply to the current option.
Contract Owners making initial Purchase Payments should be sure to specify
their allocations on the application for a Contract. If the application is in
good order, the Company will apply the initial Purchase Payment to the General
Account and the selected Division(s), and credit the Contract with Accumulation
Units within two business days of receipt at the P.O. Box for the Company's
Administrative Service Center. The number of Accumulation Units in a Division
attributable to a Purchase Payment is determined by dividing that portion of the
Purchase Payment which is allocated to the Division by the Division's
Accumulation Unit value during the Valuation Period when the allocation occurs.
IF THE APPLICATION DOES NOT SPECIFY AN ALLOCATION, THE APPLICATION IS NOT
IN GOOD ORDER.
If the application for a Contract is not in good order, the Company will
attempt to rectify it within five business days of its receipt at the P.O. Box
for the Company's Administrative Service Center. The Company will credit the
initial Purchase Payment within two business days after the application has been
rectified. Unless the Contract Owner consents otherwise, the application and the
initial Purchase Payment will be returned if the application cannot be put in
good order within five business days of its receipt.
Just like Contract Owners making initial Purchase Payments, Contract Owners
making subsequent Purchase Payments should be sure to specify how they want
their payments allocated. OTHERWISE, THE COMPANY WILL AUTOMATICALLY PROCESS THE
PURCHASE PAYMENT BASED ON THE PREVIOUS ALLOCATION.
A Contract Owner may elect to increase, decrease or change the frequency or
amount of Purchase Payments. The application and any Purchase Payments should be
sent to the Company at its Administrative Service Center.
ACCUMULATION UNIT VALUE
Accumulation Unit value is determined Monday through Friday (except for the
following Federal holidays) as of 4:00 p.m. New York time.
<TABLE>
<S> <C>
New Year's Day Independence Day
President's Day Labor Day
Good Friday Thanksgiving
Memorial Day Christmas Day
</TABLE>
A separate Accumulation Unit value is determined for each Division. If the
Company elects or is required to assess a charge for taxes, a separate
Accumulation Unit value may be calculated for Non-Qualified and Qualified
Contracts within each Division.
The net assets are determined by calculating the total value of each
Division's assets (that is, the aggregate value of the shares of the Portfolio
of the Trust held by the Division). After calculation of the net assets of a
Division, that amount is reduced by the accrued but unpaid daily charge for
mortality and expense risks and administration expense (which together amount to
1.40% per annum) and any provision for taxes which may occur. After that
calculation, the resulting number is then divided by the number of Accumulation
Units outstanding at the end of the Valuation Period to determine Accumulation
Unit value.
The Accumulation Unit value for each Division will vary with the price of a
share in the underlying Portfolio and in accordance with the Mortality and
Expense Risk Charge, Administrative Expense Charge, and any provision for taxes.
Assessments of premium tax, Withdrawal Charges and Records Maintenance Charges
are made separately for each Contract. They do not affect Accumulation Unit
value.
DISTRIBUTION OF CONTRACTS
Contracts are sold by registered representatives of broker-dealers who are
licensed insurance agents of the Company, either individually or through an
incorporated insurance agency. Commissions paid to registered representatives
may vary, but in the aggregate are not anticipated to exceed 5% of any Purchase
Payment. In addition, under certain circumstances, certain sellers of the
Contracts may be paid persistency bonuses which will take into account, among
other things, the length of time Purchase Payments have been held under a
Contract and
22
<PAGE> 27
Contract Values. A persistency bonus is not anticipated to exceed .20%, on an
annual basis, of the Contract Values considered in connection with the bonus.
SunAmerica Capital Services, Inc., located at 733 Third Avenue, 4th Floor,
New York, New York 10017, serves as distributor of the Contracts. SunAmerica
Capital Services, Inc., an indirect, wholly owned subsidiary of SunAmerica Inc.,
is registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.
WITHDRAWALS (REDEMPTIONS)
Except as explained below, the Contract Owner may redeem a Contract for all
or a portion of the Contract Value during the Accumulation Period. The Contract
Owner may also redeem Contract Values after the Annuity Date if annuity option 3
is elected. Withdrawal Charges may be assessed. (See "Contract
Charges -- Withdrawal Charge").
Effective January 1, 1989, withdrawals of amounts attributable to
contributions made pursuant to a salary reduction agreement (as defined in
Section 403(b)(11) of the Code) are limited to circumstances only: when the
Contract Owner attains age 59 1/2, separates from service, dies, becomes
disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of
hardship. Withdrawals for hardship are restricted to the portion of the Contract
Owner's Contract Value which represents contributions made by the Contract Owner
and does not include any investment results. These limitations on withdrawals
apply to: (1) salary reduction contributions made after December 31, 1988; (2)
income attributable to such contributions; and (3) income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect rollovers or exchanges between certain Qualified Plans. Tax penalties may
also apply. (See "Taxes -- Tax Sheltered Annuities -- Withdrawal Limitations").
While the foregoing limitations only apply to certain contracts issued in
connection with 403(b) Qualified Plans, all Contract Owners should seek
competent tax advice regarding any withdrawals or distributions.
Except in connection with the Systematic Withdrawal Program, the minimum
partial withdrawal amount is $500, or the Owner's entire interest in the
Division from which a withdrawal is requested. The Owner's interest in the
Division from which the withdrawal is requested must be at least $500 after the
withdrawal is completed if anything is left in that Division.
A written withdrawal request or Systematic Withdrawal Program enrollment
form, as the case may be, must be sent to the Company, c/o its Administrative
Service Center. The required form will not be in good order unless it includes
the Contract Owner's Tax I.D. Number (e.g., Social Security Number) and provides
instructions regarding withholding of income taxes. The Company provides the
required forms.
If the request is for total withdrawal, the Contract or a Lost Contract
Affidavit (which may be obtained by calling the Company's Administrative Service
Center) must be submitted as well. The Withdrawal Value is determined on the
basis of the Accumulation Unit values next computed following receipt of a
request in proper order. The Withdrawal Value will be paid within seven days
after the day a proper request is received by the Company. However, the Company
may suspend the right of withdrawal or delay payment more than seven days: (1)
during any period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings); (2) when trading on the markets the
Separate Account or Portfolios normally utilize is restricted or an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Separate Account's or a Portfolio's investments or determination of
Accumulation Unit value is not reasonably practicable; or (3) for such other
periods as the Securities and Exchange Commission, by order, may permit for
protection of Contract Owners.
SYSTEMATIC WITHDRAWAL PROGRAM
Certain Participants of Nonqualified Plan Contracts and Contracts issued in
connection with IRAs may choose to withdraw amounts which in the aggregate add
up to a maximum of 10% of their Purchase Payments annually pursuant to a
Systematic Withdrawal Program without charge. Withdrawals are taxable and a 10%
federal tax penalty may apply to withdrawals before age 59 1/2. Participants
must complete an enrollment form which describes the program and send it to the
Company, c/o its Administrative Service Center. Participation in the Systematic
Withdrawal Program may be elected at the time the Contract is issued or on any
date prior to the Annuity Date.
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<PAGE> 28
Depending on fluctuations in the net asset value of the Portfolios, systematic
withdrawals may reduce or even exhaust Contract Value. The minimum systematic
withdrawal amount is $250 per withdrawal.
Amounts withdrawn under to the Systematic Withdrawal Program may be
electronically wired to the Contract Owner's financial institution by completing
the instructions on the Electronic Fund Transfer Form or by written request
delivered to the Company at its Administrative Service Center. A voided check
(for checking accounts), the account number and bank ABA number must accompany
all requests. Electronic transfers may also be requested on the Systematic
Withdrawal Request Form. The Company reserves the right to modify, suspend or
terminate the Systematic Withdrawal Program and the availability of electronic
fund transfers at any time.
ERISA PLANS
Spousal consent may be required when a married Contract Owner seeks a
distribution from a Contract that has been issued in connection with a Qualified
Plan or a Non-Qualified Plan that is subject to Title I of ERISA. Owners should
obtain competent advice.
TEXAS OPTIONAL RETIREMENT PROGRAM
A participant in the Texas Optional Retirement Program ("ORP") is required
to obtain a certificate of termination from the participant's employer before a
Contract can be redeemed. This requirement is imposed because the Attorney
General of Texas has ruled that participants in the ORP may redeem their
interest in a Contract issued pursuant to the ORP only upon termination of their
employment by Texas public institutions of higher education, or upon retirement,
death or total disability.
MINIMUM CONTRACT VALUE
If the Contract Value is less than $500 and no Purchase Payments have been
made during the previous three full calendar years, the Company reserves the
right, after 60 days written notice to the Owner, to terminate the Contract and
distribute the Withdrawal Value to the Owner. This privilege will be exercised
only if the Contract Value has been reduced to less than $500 as a result of
withdrawals, and state law permits. In no instance shall such termination occur
if the value has fallen below $500 due to either decline in Accumulation Unit
value or the imposition of fees and charges.
- --------------------------------------------------------------------------------
ADMINISTRATION
- --------------------------------------------------------------------------------
The Company has primary responsibility for all administration of the
Contracts and the Separate Account. Its Administrative Service Center is located
at P. O. Box 54299, Los Angeles, California 90054-0299 and its telephone number
is (800) 445-7862.
The administrative services provided include, but are not limited to:
issuance of the Contracts; maintenance of Contract Owner records; Contract Owner
services; calculation of unit values; and preparation of Contract Owner reports.
Contract statements and transaction confirmations are mailed to Contract
Owners at least quarterly. Contract Owners should read their statements
carefully and verify their accuracy. Questions about periodic statements should
be communicated to the Company promptly. The Company will investigate all
complaints and make any necessary adjustments retroactively, provided that it
has received notice of a potential error within 30 days after the date the
Contract Owner receives the questioned statement. If the Company has not
received notice of a potential error within this time, any adjustment shall be
made as of the date that the Administrative Service Center receives notice of
the potential error.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH
24
<PAGE> 29
CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.
GENERAL
Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is not taxed on increases in the value of a Contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the annuity option elected. For a lump sum payment received as a total surrender
(total redemption), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For a payment received as a withdrawal
(partial redemption), federal tax liability is determined on a last-in-first-out
basis, meaning taxable income is withdrawn before the cost basis of the Contract
is withdrawn. For Non-Qualified Contracts, the cost basis is generally the
Purchase Payments, while for Qualified Contracts there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
Tax penalties may also apply.
For annuity payments, the taxable portion is determined by a formula which
establishes the ratio that the cost basis of the Contract bears to the total
value of annuity payments for the term of the annuity Contract. The taxable
portion is taxed at ordinary income tax rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the meaning of Section
72 of the Code. Contract Owners, Annuitants and Beneficiaries under the
Contracts should seek competent financial advice about the tax consequences of
distributions under the retirement plan under which the Contracts are purchased.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Separate Account is not a separate entity from
the Company and its operations form a part of the Company.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires the Company (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a Contract. For "eligible rollover distributions" from Contracts
issued under certain types of Qualified Plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct "trustee to trustee" transfer. This
requirement is mandatory and cannot be waived by the Contract Owner. Withholding
on other types of distributions can be waived.
An "eligible rollover distribution" is the estimated taxable portion of any
amount received by a covered employee from a plan qualified under section 401(a)
or 403(a) of the Code, or from a tax-sheltered annuity qualified under section
403(b) of the Code (other than (1) annuity payments for the life (or life
expectancy) of the employee, or joint lives (or joint life expectancies) of the
employee and his or her designated Beneficiary, or for a specified period of ten
years or more; and (2) distributions required to be made under the Code).
Failure to "roll over" the entire amount of an eligible rollover distribution
(including an amount equal to the 20% portion of the distribution that was
withheld) could have adverse tax consequences, including the imposition of a
penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a Contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the Contract Owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements
25
<PAGE> 30
if, as of the close of each quarter, the underlying assets meet the
diversification standards for a regulated investment company, and no more than
55% of the total assets consist of cash, cash items, U.S. Government securities
and securities of other regulated investment companies.
The Treasury Department has issued Regulations which establish
diversification requirements for the investment portfolios underlying variable
contracts such as the Contracts. The Regulations amplify the diversification
requirements for variable contracts set forth in the Code and provide an
alternative to the safe harbor provision described above. Under the Regulations
an investment portfolio will be deemed adequately diversified if: (1) no more
than 55% of the value of the total assets of the portfolio is represented by any
one investment; (2) no more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more than 80% of the
value of the total assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the total assets of the
portfolio is represented by any four investments. For purposes of determining
whether or not the diversification standards imposed on the underlying assets of
variable contracts by Section 817(h) of the Code have been met, "each United
States government agency or instrumentality shall be treated as a separate
issuer."
The Company intends that each Portfolio of the Trust underlying the
Contracts will be managed by the investment adviser for the Trust in such a
manner as to comply with these diversification requirements.
MULTIPLE CONTRACTS
Multiple annuity contracts which are issued within a calendar year to the
same contract owner by one company or its affiliates are treated as one annuity
contract for purposes of determining the tax consequences of any distribution.
Such treatment may result in adverse tax consequences including more rapid
taxation of the distributed amounts from such combination of contracts. The
Company believes that Congress intended to affect the purchase of multiple
deferred annuity contracts which may have been purchased to avoid withdrawal
income tax treatment. Contract Owners should consult a tax adviser prior to
purchasing more than one annuity contract in any calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment of a Contract may be a taxable event and may also be
prohibited by ERISA in some circumstances. Contract Owners should therefore
consult competent tax advisers should they wish to assign their Contracts.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate Purchase
Payments made, any amount withdrawn not in form of an annuity payment will be
treated as coming first from the earnings and then, only after the income
portion is exhausted, as coming from the principal. Withdrawn earnings are
includible in a taxpayer's gross income. Section 72 further provides that a 10%
penalty will apply to the income portion of any premature distribution. The
penalty is not imposed on amounts received: (1) after the taxpayer reaches
59 1/2; (2) upon the death of the Contract Owner; (3) if the taxpayer is totally
disabled; (4) 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;
(5) under an immediate annuity; or (6) which are allocable to purchase payments
made prior to August 14, 1982.
The above information applies to Qualified Contracts issued pursuant to
Section 457 of the Code, but does not apply to other Qualified Contracts.
Separate tax withdrawal penalties and restrictions apply to Qualified Contracts.
(See "Tax Treatment of Withdrawals -- Qualified Contracts").
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for
use under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and the terms and conditions of each
specific plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan, regardless of the terms and conditions of the contracts issued
pursuant to the plan.
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<PAGE> 31
Following are general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not exhaustive and are
for general informational purposes only. The tax rules regarding Qualified Plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts").
(A) H.R. 10 OR KEOGH PLANS
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" Plans. Contributions made to the Plan for the benefit
of the employees will not be included in the gross income of the employees
until distributed from the Plan. The tax consequences to participants may
vary depending upon the particular Plan design. However, the Code places
limitations and restrictions on all Plans on such items as: amounts of
allowable contributions; form, manner and timing of distributions; vesting
and nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals -- Qualified Contracts").
Purchasers of Contracts for use with an H.R. 10 Plan should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
(B) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employee until the employee receives distributions from
the Contract. The amount of contributions to the tax-sheltered annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code sets
forth additional restrictions governing such items as transferability,
distributions, nondiscrimination and withdrawals. (See "Tax Treatment of
Withdrawals -- Qualified Contracts"). Any employee should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
(C) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement
Annuity" ("IRA"). Under applicable limitations, certain amounts may be
contributed to an IRA which will be deductible from the individual's gross
income. These IRAs are subject to limitations on eligibility,
contributions, transferability and distributions. (See "Tax Treatment of
Withdrawals -- Qualified Contracts"). Under certain conditions,
distributions from other IRAs and other Qualified Plans may be rolled over
or transferred on a tax-deferred basis into an IRA. Sales of Contracts for
use with IRAs are subject to special requirements imposed by the Code,
including the requirement that certain informational disclosure be given to
persons desiring to establish an IRA. Purchasers of Contracts to be
qualified as IRAs should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
(D) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under
the plan. Contributions to the plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from
the plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations on all plans
on such items as amount of allowable contributions; form, manner and timing
of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals -- Qualified Contracts".) Purchasers of Contracts for
27
<PAGE> 32
use with corporate pension or profit sharing plans should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS
Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion
of any early distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b) (IRAs).
The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the Contract Owner or
Annuitant (as applicable) reaches age 59 1/2; (2) distributions following the
death or disability of the Contract Owner or Annuitant (as applicable) (for this
purpose "disability" is defined in Section 72(m)(7) of the Code); (3)
distributions that are part of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the Contract
Owner or Annuitant (as applicable) or the joint lives (or joint life
expectancies) of such Contract Owner or Annuitant (as applicable) and his or her
designated Beneficiary; (4) distributions to a Contract Owner or Annuitant (as
applicable) who has separated from service after he or she has attained age 55;
(5) distributions made to the Contract Owner or Annuitant (as applicable) to the
extent such distributions do not exceed the amount allowable as a deduction
under Code Section 213 to the Contract Owner or Annuitant (as applicable) for
amounts paid during the taxable year for medical care; and (6) distributions
made to an alternate payee pursuant to a qualified domestic relations order.
The exceptions stated in items (4), (5) and (6) above do not apply in the
case of an IRA.
The taxable portion of a withdrawal or distribution from Contracts issued
under certain types of plans may, under some circumstances, be "rolled over"
into another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for any
"eligible rollover distribution" made by certain types of plans (as described
above under "Taxes -- Withholding Tax on Distributions") that is transferred
within 60 days of receipt into a plan qualified under section 401(a) or 403(a)
of the Code, a tax-sheltered annuity, an IRA, or an individual retirement
account described in section 408(a) of the Code. Plans making such eligible
rollover distributions are also required, with some exceptions specified in the
Code, to provide for a direct "trustee to trustee" transfer of the distribution
to the transferee plan designated by the recipient.
TAX SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Tax Reform Act of 1986, effective January 1, 1989, limits the
withdrawal of amounts attributed to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) to
circumstances only: when the Contract Owner attains age 59 1/2, separates from
service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the
Code), or in the case of hardship. Withdrawals for hardship are restricted to
the portion of the Contract Owner's Contract Value which represents
contributions by the Contract Owner and does not include any investment results.
These limitations on withdrawals apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions, and
to income attributable to amounts held as of December 31, 1988. The limitations
on withdrawals do not affect rollovers or exchanges between certain Qualified
Plans. Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
DEFERRED COMPENSATION PLANS -- SECTION 457
Under Section 457 of the Code, governmental and certain other tax exempt
employers may establish deferred compensation plans for the benefit of their
employees which may invest in annuity contracts. The Code, as in the case of
Qualified Plans, establishes limitations and restrictions on eligibility,
contributions, and distributions. Under these plans, contributions made for the
benefit of the employees will not be includible in the employees' gross income
until distributed from the plan. However, under a 457 plan all the plan assets
shall remain solely the property of the employer, subject only to the claims of
the employer's general creditors until such time as made available to a
participant or a beneficiary.
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- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
There are no legal proceedings to which the Separate Account is a party or
to which the assets of the Separate Account are subject. The Company is engaged
in various kinds of routine litigation that in the Company's judgment will not
have a material adverse impact upon the Company's financial position.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM PAGE
----
<S> <C>
COMPANY................................................................................... 1
INDEPENDENT ACCOUNTANTS................................................................... 1
DISTRIBUTORS.............................................................................. 1
PERFORMANCE DATA.......................................................................... 2
Money Market Division................................................................... 2
Other Divisions......................................................................... 3
ANNUITY PAYMENTS.......................................................................... 4
Annuity Unit Value...................................................................... 4
Amounts of Annuity Payments............................................................. 4
Subsequent Monthly Payments............................................................. 5
FINANCIAL STATEMENTS...................................................................... 5
</TABLE>
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<PAGE> 34
Please forward a copy (without charge) of the Statement of Additional
Information concerning ICAP II Variable Annuity Contracts issued by
Anchor National Life Insurance Company to:
(Please print or type and fill in all information.)
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Date: Signed:
------------------------ -------------------------------------
Return to: Anchor National Life Insurance Company, Annuity Service Center, P.O.
Box 54299, Los Angeles, California 90054-0299.
<PAGE> 35
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACTS
ISSUED BY
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL
INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL
FLEXIBLE PREMIUM 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 FEBRUARY 2, 1998, AS IT MAY BE SUPPLEMENTED, CALL OR WRITE THE
COMPANY C/O ITS ADMINISTRATIVE SERVICE CENTER, P.O. BOX 54299, LOS ANGELES,
CALIFORNIA 90054-0299, 1-800-445-SUN2.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED
FEBRUARY 2, 1998
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C>
Company................................................ 1
Independent Accountants................................ 1
Distributors........................................... 1
Performance Data....................................... 2
Money Market Division............................... 2
Other Divisions..................................... 3
Annuity Payments....................................... 4
Annuity Unit Value.................................. 4
Amount of Annuity Payments.......................... 4
Subsequent Monthly Payments......................... 5
Financial Statements................................... 5
</TABLE>
<PAGE> 37
COMPANY
Information regarding the Anchor National Life Insurance Company
(the "Company") and its ownership is contained in the Prospectus.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of the Company as of September
30, 1997 and 1996 and for each of the three years in the period ended September
30, 1997 are presented in this Statement of Additional Information. The
consolidated financial statements of the Company should be considered only as
bearing on the ability of the Company to meet its obligation under the
Contracts. The financial statements of the Separate Account as of December 31,
1996 and for each of the two years in the period ended December 31, 1996, also
are included in this Statement of Additional Information.
Price Waterhouse LLP, 400 South Hope Street, Los Angeles, California
90071, serves as the independent accountants for the Separate Account and the
Company. The financial statements referred to above included in this Statement
of Additional Information have been so included in reliance on the reports of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
DISTRIBUTORS
The Contracts are sold by licensed insurance agents, where the
Contracts may be lawfully sold, who are registered representatives of
broker-dealers which are registered under the Securities Exchange Act of 1934
and are members of the National Association of Securities Dealers, Inc.
The offering is on a continuous basis.
Effective January 28, 1994, the Contracts are offered through the
distributors for the Separate Account, SunAmerica Capital Services, Inc., 733
Third Avenue, 4th Floor, New York, New York 10017, which is an indirect wholly
owned subsidiary of SunAmerica Inc. Prior to this time, Anchor National
Financial Services, Inc., SunAmerica Securities, Inc., both located at 2800 N.
Central Avenue, Phoenix, Arizona 85004, and Royal Alliance Associates, Inc.,
located at 733 Third Street, 4th Floor, New York, New York 10017, served as
co-distributors of the Contract. SunAmerica Securities, Inc. and Royal Alliance
Associates, Inc. are each an indirect wholly-owned subsidiary of SunAmerica Inc.
Prior to the closing date of the assumption reinsurance agreement between
Integrated Resources Life Insurance Company and Anchor National Life Insurance
Company discussed in the Prospectus, the principal underwriter of the Contracts
was Integrated Resources Capital Services, Inc.
For the year ended December 31, 1994, the aggregate amount of
underwriting commissions paid to SunAmerica Capital Services, Inc. was
$2,973,118, of which $309,945 was retained by them. For the year ended December
31, 1995, the aggregate amount of underwriting commissions paid to SunAmerica
Capital Services, Inc. was $1,572,943, of which $162,469 was retained by them.
For the year ended December 31, 1996, the aggregate amount of underwriting
commissions paid to SunAmerica Capital Services, Inc. was $1,182,796, of which
$119,706 was retained by them.
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<PAGE> 38
PERFORMANCE DATA
Performance data for the various Divisions of the Separate Account are
determined in the manner described below.
Money Market Division
The annualized current yield and the effective yield for the Money
Market Division for the 7 day period ended December 31, 1996 were 3.30% and
3.35%, respectively.
Current yield is computed by first determining the Base Period Return
attributable to a hypothetical Contract having a balance of one Accumulation
Unit at the beginning of a 7 day period using the formula:
Base Period Return = (EV-SV-RMC)/(SV)
where:
SV = value of one Accumulation Unit at the start of a 7 day period
EV = value of one Accumulation Unit at the end of the 7 day period
RMC = an allocated portion of the $30 annual Records Maintenance
Charge, prorated for 7 days
The change in the value of an Accumulation Unit during the 7 day period
reflects the income received, minus any expenses incurred, during such 7 day
period. The Records Maintenance Charge is first allocated among the Divisions
and the General Account so that each Division's allocated portion of the charge
is proportional to the percentage of the number of Contract Owners' accounts
that have money allocated to that Division. The portion of the Charge allocable
to the Money Market Division is further reduced, for purposes of the yield
computation, by multiplying it by the ratio that the value of the hypothetical
Contract bears to the value of an account of average size for Contracts funded
by the Money Market Division. Finally, as is done with the other charges
discussed above, the result is multiplied by the fraction 7/365 to arrive at the
portion attributable to the 7 day period.
The current yield is then obtained by annualizing the Base Period
Return:
Current Yield = (Base Period Return) x (365/7)
The Money Market Division also quotes an "effective yield" that differs
from the current yield given above in that it takes into account the effect of
dividend reinvestment in the Money Market Division. The effective yield, like
the current yield, is derived from the Base Period Return over a 7 day period.
However, the effective yield accounts for dividend reinvestment by compounding
the current yield according to the formula:
365/7
Effective Yield = [(Base Period Return + 1) - 1].
Net investment income for yield quotation purposes will not include
either realized capital gains and losses or unrealized appreciation and
depreciation, whether reinvested or not. The yield quotations also do not
reflect any impact of premium taxes, transfer fees, or Withdrawal or Annuity
Charges.
The yields quoted should not be considered a representation of the
yield of the Money Market Division in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Division and changes in interest rates on
such investments, but also on factors such as a Contract Owner's account size
(since the impact of
2
<PAGE> 39
fixed dollar charges will be greater for small accounts than for larger
accounts).
Yield information may be useful in reviewing the performance of the
Money Market Division and for providing a basis for comparison with other
investment alternatives. However, the Money Market Division's yield fluctuates,
unlike bank deposits or other investments that typically pay a fixed yield for a
stated period of time.
Other Divisions
Divisions of the Separate Account other than the Money Market Division
compute their performance data as "total return." The total returns of the
various Divisions over the last 1, 5 and 10 year periods, and since their
inception, are shown below, both with/without an assumed complete redemption
at the end of the period.
TOTAL ANNUAL RETURN (IN PERCENT) FOR PERIOD ENDING ON 12/31/96:
(RETURN WITH/WITHOUT REDEMPTION)
<TABLE>
<CAPTION>
INCEPTION SINCE
DIVISION DATE 1 YEAR 5 YEARS 10 YEARS INCEPTION
------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Foreign Securities .. 3/23/87 4.72/9.72 4.71/4.86 -- 3.57/3.57
Capital Appreciation 3/23/87 18.31/23.31 17.97/18.07 -- 13.63/13.63
Growth 8/13/84 18.26/23.26 9.54/9.67 11.51/11.51 12.19/12.19
Natural Resources 1/01/88 7.27/12.27 11.56/11.67 -- 7.41/7.41
Growth and Income* .. 3/23/87 13.50/18.50 11.31/11.43 -- 8.52/8.52
Strategic Multi-Asset 3/23/87 8.11/13.11 8.66/8.79 -- 7.62/7.62
Multi-Asset 3/23/87 7.21/12.21 8.43/8.56 -- 8.61/8.61
High Yield 1/01/86 4.99/9.99 9.64/9.76 7.06/7.06 7.77/7.77
Target '98 5/02/88 -2.87/2.13 4.58/4.73 -- 7.69/7.69
Fixed Income 8/13/84 -4.15/0.85 4.48/4.63 5.82/5.82 7.79/7.79
Gov't & Quality Bond 8/13/84 -3.56/1.44 4.89/5.04 6.75/6.75 8.26/8.26
</TABLE>
Total return figures are based on historical data and are not intended to
indicate future performance.
* Formerly the Convertible Securities Division
These figures show the total return hypothetically experienced by
Contracts funded through the various Divisions of the Account over the time
periods shown.
Total return for a Division represents a computed annual rate of return
that, when compounded annually over the time period shown and applied to a
hypothetical initial investment in a Contract funded by that Division made at
the beginning of the period, will produce the same Contract Value at the end of
the period that the hypothetical investment would have produced over the same
period. The total rate of return (T) is computed so that it satisfies the
formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
3
<PAGE> 40
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1, 5, or 10 year
periods at the end of the 1, 5, or 10 year periods
(or fractional portion thereof).
The total return figures given reflect the effects of both
non-recurring and recurring charges, as discussed herein. Recurring charges are
taken into account in a manner similar to that used for the yield computations
for the Money Market Division, described above. The applicable Withdrawal Charge
(if any) is deducted as of the end of the period, to reflect the effect of the
assumed complete redemption in the case of the first of the two figures given in
the table above for each Division and time period. Because the impact of Records
Maintenance Charges on a particular Contract Owner's account would generally
have differed from that assumed in the computation, due to differences between
most actual allocations and the assumed one, as well as differences due to
varying account sizes, the total return experienced by an actual account over
these same time periods would generally have been different from those given
above. As with the Money Market Division yield figures, total return figures
are derived from historical data and are not intended to be a projection of
future performance.
ANNUITY PAYMENTS
Annuity Unit Value
The value of an Annuity Unit is determined independently for each
Separate Account Division.
For each Division, the value of an Annuity Unit for any Valuation
Period is determined by multiplying the Annuity Unit value for the immediately
preceding Valuation Period by the net investment factor for the Valuation Period
for which the Annuity Unit value is being calculated and multiplying the result
by an interest factor which offsets the effect of the investment earnings rate
of five percent (5%) per annum that is assumed in the annuity table contained in
the Contract.
The net investment factor for each Division for a Valuation Period is
determined by dividing (a) by (b) and subtracting (c) from the result where: (a)
is the value of an Accumulation Unit from the applicable Division as of the end
of the current Valuation Period; (b) is the value of an Accumulation Unit for
the applicable Division as of the end of the immediately preceding Valuation
Period; and (c) is a factor representing the daily charge for mortality and
expense risks and administration of 1.40% per annum.
Amount of Annuity Payments
The initial annuity payment is determined by applying the Contract
Value, less any premium tax, and less any Annuity Charge (if annuity option 3 is
elected), to the annuity table specified in the Contract. Those tables are based
on a set amount per $1,000 of proceeds applied. The appropriate rate must be
determined by the sex and adjusted age of the Annuitant and joint Annuitant, if
any. The adjusted age is determined from the actual age to the nearest birthday
at the Annuity Date according to the table below. The Adjusted Age Table is used
to correct for population mortality improvements over time.
4
<PAGE> 41
ADJUSTED AGE TABLE
<TABLE>
<CAPTION>
Adjustment Adjustment
Calendar to Actual Calendar to Actual
Year of Birth Age Year of Birth Age
- ------------ ---------- ------------- ----------
<S> <C> <C> <C>
1899-1905 +6 1946-1951 -1
1906-1911 +5 1952-1958 -2
1912-1918 +4 1959-1965 -3
1919-1925 +3 1966-1972 -4
1926-1932 +2 1973-1979 -5
1933-1938 +1 1980-1985 -6
1939-1945 0 1986-1992 -7
</TABLE>
The dollars applied are then divided by 1,000 and multiplied by the
appropriate annuity factor to indicate the amount of the first annuity payment.
That amount is divided by the value of an Annuity Unit as of the Annuity Date to
establish the number of Annuity Units representing each annuity payment. The
number of Annuity Units determined for the first annuity payment remains
constant for the second and subsequent monthly payments.
Subsequent Monthly Payments
The amount of the second and subsequent annuity payments is determined
by multiplying the number of Annuity Units by the Annuity Unit value as of the
Valuation Period next preceding the date on which each annuity payment is due.
The dollar amount of the first annuity payment determined as above is divided by
the value of an Annuity Unit as of the Annuity Date to establish the number of
Annuity Units representing each annuity payment. The number of Annuity Units
determined for the first annuity payment remains constant for the second and
subsequent monthly payments.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein
should be considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts. The financial statements of the Separate
Account are also included in this Statement of Additional Information.
5
<PAGE> 42
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
Anchor National Life Insurance Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated income statement and statement of cash flows present fairly, in all
material respects, the financial position of Anchor National Life Insurance
Company and its subsidiaries at September 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1997, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Los Angeles, California
November 7, 1997
6
<PAGE> 43
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
INVESTMENTS:
Cash and short-term investments......................... $ 113,580,000 $ 122,058,000
Bonds, notes and redeemable preferred stocks:
Available for sale, at fair value (amortized cost:
1997, $1,942,485,000; 1996, $2,001,024,000)........ 1,986,194,000 1,987,271,000
Mortgage loans.......................................... 339,530,000 98,284,000
Common stocks, at fair value (cost: 1997, $271,000;
1996, $2,911,000).................................... 1,275,000 3,970,000
Real estate............................................. 24,000,000 39,724,000
Other invested assets................................... 143,722,000 77,925,000
-------------- -------------
Total investments....................................... 2,608,301,000 2,329,232,000
Variable annuity assets................................... 9,343,200,000 6,311,557,000
Receivable from brokers for sales of securities........... -- 52,348,000
Accrued investment income................................. 21,759,000 19,675,000
Deferred acquisition costs................................ 536,155,000 443,610,000
Other assets.............................................. 61,524,000 48,113,000
-------------- -------------
TOTAL ASSETS.............................................. $12,570,939,000 $9,204,535,000
============== =============
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
Reserves for fixed annuity contracts.................... $ 2,098,803,000 $1,789,962,000
Reserves for guaranteed investment contracts............ 295,175,000 415,544,000
Payable to brokers for purchases of securities.......... 263,000 --
Income taxes currently payable.......................... 32,265,000 21,486,000
Other liabilities....................................... 122,728,000 74,710,000
-------------- -------------
Total reserves, payables and accrued liabilities........ 2,549,234,000 2,301,702,000
-------------- -------------
Variable annuity liabilities.............................. 9,343,200,000 6,311,557,000
-------------- -------------
Subordinated notes payable to Parent...................... 36,240,000 35,832,000
-------------- -------------
Deferred income taxes..................................... 67,047,000 70,189,000
-------------- -------------
Shareholder's equity:
Common Stock............................................ 3,511,000 3,511,000
Additional paid-in capital.............................. 308,674,000 280,263,000
Retained earnings....................................... 244,628,000 207,002,000
Net unrealized gains (losses) on debt and equity
securities available for sale........................ 18,405,000 (5,521,000)
-------------- -------------
Total shareholder's equity.............................. 575,218,000 485,255,000
-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY................ $12,570,939,000 $9,204,535,000
============== =============
</TABLE>
See accompanying notes.
7
<PAGE> 44
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Investment income.......................... $ 210,759,000 $ 164,631,000 $129,466,000
------------- ------------- ------------
Interest expense on:
Fixed annuity contracts.................. (109,217,000) (82,690,000) (72,975,000)
Guaranteed investment contracts.......... (22,650,000) (19,974,000) (3,733,000)
Senior indebtedness...................... (2,549,000) (2,568,000) (227,000)
Subordinated notes payable to Parent..... (3,142,000) (2,556,000) (2,448,000)
------------- ------------- ------------
Total interest expense................... (137,558,000) (107,788,000) (79,383,000)
------------- ------------- ------------
NET INVESTMENT INCOME...................... 73,201,000 56,843,000 50,083,000
------------- ------------- ------------
NET REALIZED INVESTMENT LOSSES............. (17,394,000) (13,355,000) (4,363,000)
------------- ------------- ------------
Fee income:
Variable annuity fees.................... 139,492,000 103,970,000 84,171,000
Net retained commissions................. 39,143,000 31,548,000 24,108,000
Surrender charges........................ 5,529,000 5,184,000 5,889,000
Asset management fees.................... 25,764,000 25,413,000 26,935,000
Other fees............................... 3,218,000 3,390,000 4,002,000
------------- ------------- ------------
TOTAL FEE INCOME........................... 213,146,000 169,505,000 145,105,000
------------- ------------- ------------
GENERAL AND ADMINISTRATIVE EXPENSES........ (98,802,000) (81,552,000) (64,457,000)
------------- ------------- ------------
AMORTIZATION OF DEFERRED ACQUISITION
COSTS.................................... (66,879,000) (57,520,000) (58,713,000)
------------- ------------- ------------
ANNUAL COMMISSIONS......................... (8,977,000) (4,613,000) (2,658,000)
------------- ------------- ------------
PRETAX INCOME.............................. 94,295,000 69,308,000 64,997,000
Income tax expense......................... (31,169,000) (24,252,000) (25,739,000)
------------- ------------- ------------
NET INCOME................................. $ 63,126,000 $ 45,056,000 $ 39,258,000
============= ============= ============
</TABLE>
See accompanying notes
8
<PAGE> 45
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 63,126,000 $ 45,056,000 $ 39,258,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to:
Fixed annuity contracts.............................. 109,217,000 82,690,000 72,975,000
Guaranteed investment contracts...................... 22,650,000 19,974,000 3,733,000
Net realized investment losses....................... 17,394,000 13,355,000 4,363,000
Accretion of net discounts on investments............ (18,576,000) (8,976,000) (6,865,000)
Amortization of goodwill............................. 1,187,000 1,169,000 1,168,000
Provision for deferred income taxes.................. (16,024,000) (3,351,000) (1,489,000)
Change in:
Accrued investment income................................. (2,084,000) (5,483,000) 3,373,000
Deferred acquisition costs................................ (113,145,000) (60,941,000) (7,180,000)
Other assets.............................................. (14,598,000) (8,000,000) 7,047,000
Income taxes currently payable............................ 10,779,000 5,766,000 3,389,000
Other liabilities......................................... 14,187,000 5,474,000 4,063,000
Other, net.................................................. 418,000 (129,000) 7,000
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES..................... 74,531,000 86,604,000 123,842,000
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on:
Fixed annuity contracts................................... 1,097,937,000 651,649,000 245,320,000
Guaranteed investment contracts........................... 55,000,000 134,967,000 275,000,000
Net exchanges to (from) the fixed accounts of variable
annuity contracts......................................... (620,367,000) (236,705,000) 10,475,000
Withdrawal payments on:
Fixed annuity contracts................................... (242,589,000) (173,489,000) (237,977,000)
Guaranteed investment contracts........................... (198,062,000) (16,492,000) (1,638,000)
Claims and annuity payments on fixed annuity contracts...... (35,731,000) (31,107,000) (31,237,000)
Net receipts from (repayments of) other short-term
financings................................................ 34,239,000 (119,712,000) 3,202,000
Capital contribution received............................... 28,411,000 27,387,000 --
Dividends paid.............................................. (25,500,000) (29,400,000) --
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................... 93,338,000 207,098,000 263,145,000
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
Bonds, notes and redeemable preferred stocks.............. $(2,566,211,000) $(1,937,890,000) $(1,556,586,000)
Mortgage loans............................................ (266,771,000) (15,000,000) --
Other investments, excluding short-term investments....... (75,556,000) (36,770,000) (13,028,000)
Sales of:
Bonds, notes and redeemable preferred stocks.............. 2,299,063,000 1,241,928,000 1,026,078,000
Real estate............................................... -- 900,000 36,813,000
Other investments, excluding short-term investments....... 6,421,000 4,937,000 5,130,000
Redemptions and maturities of:
Bonds, notes and redeemable preferred stocks.............. 376,847,000 288,969,000 178,688,000
Mortgage loans............................................ 25,920,000 11,324,000 14,403,000
Other investments, excluding short-term investments....... 23,940,000 20,749,000 13,286,000
------------- ------------- -------------
NET CASH USED BY INVESTING ACTIVITIES......................... (176,347,000) (420,853,000) (295,216,000)
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS.... (8,478,000) (127,151,000) 91,771,000
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD........ 122,058,000 249,209,000 157,438,000
------------- ------------- -------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD.............. $ 113,580,000 $ 122,058,000 $ 249,209,000
============= ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness............................... $ 7,032,000 $ 5,982,000 $ 3,235,000
============= ============= =============
Net income taxes paid....................................... $ 36,420,000 $ 22,031,000 $ 23,656,000
============= ============= =============
</TABLE>
See accompanying notes.
9
<PAGE> 46
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Anchor National Life Insurance Company (the "Company") is a wholly owned
indirect subsidiary of SunAmerica, Inc. (the "Parent"). The Company is an
Arizona-domiciled life insurance company and conducts its business through three
segments: annuity operations, asset management and broker-dealer operations.
Annuity operations include the sale and administration of fixed and variable
annuities and guaranteed investment contracts. Asset management, which includes
the sale and management of mutual funds, is conducted by SunAmerica Asset
Management Corp. Broker-dealer operations include the sale of securities and
financial services products, and are conducted by Royal Alliance Associates,
Inc.
The operations of the Company are influenced by many factors, including
general economic conditions, monetary and fiscal policies of the federal
government, and policies of state and other regulatory authorities. The level of
sales of the Company's financial products is influenced by many factors,
including general market rates of interest; strength, weakness and volatility of
equity markets; and terms and conditions of competing financial products. The
Company is exposed to the typical risks normally associated with a portfolio of
fixed-income securities, namely interest rate, option, liquidity and credit
risk. The Company controls its exposure to these risks by, among other things,
closely monitoring and matching the duration of its assets and liabilities,
monitoring and limiting prepayment and extension risk in its portfolio,
maintaining a large percentage of its portfolio in highly liquid securities, and
engaging in a disciplined process of underwriting, reviewing and monitoring
credit risk. The Company also is exposed to market risk, as market volatility
may result in reduced fee income in the case of assets managed in mutual funds
and held in separate accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and include the accounts of the Company and all of its wholly owned
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation. Certain prior period amounts have been reclassified
to conform with the 1997 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
INVESTMENTS: Cash and short-term investments primarily include cash,
commercial paper, money market investments, repurchase agreements and short-term
bank participations. All such investments are carried at cost plus accrued
interest, which approximates fair value, have maturities of three months or less
and are considered cash equivalents for purposes of reporting cash flows.
Bonds, notes and redeemable preferred stocks available for sale and common
stocks are carried at aggregate fair value and changes in unrealized gains or
losses, net of tax, are credited or charged directly to shareholder's equity.
Bonds, notes and redeemable preferred stocks are reduced to estimated net
realizable value when necessary for declines in value considered to be other
than temporary. Estimates of net realizable value are subjective and actual
realization will be dependent upon future events.
Mortgage loans are carried at amortized unpaid balances, net of provisions
for estimated losses. Real estate is carried at the lower of cost or fair value.
Other invested assets include investments in limited partnerships, which are
accounted for by using the cost method of accounting; separate account
investments; leveraged leases; policy loans, which are carried at unpaid
balances; and collateralized mortgage obligation residuals.
10
<PAGE> 47
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Realized gains and losses on the sale of investments are recognized in
operations at the date of sale and are determined using the specific cost
identification method. Premiums and discounts on investments are amortized to
investment income using the interest method over the contractual lives of the
investments.
INTEREST RATE SWAP AGREEMENTS: The net differential to be paid or received
on interest rate swap agreements ("Swap Agreements") entered into to reduce the
impact of changes in interest rates is recognized over the lives of the
agreements, and such differential is classified as Interest Expense in the
income statement. All outstanding Swap Agreements are designated as hedges and,
therefore, are not marked to market. However, in the event that a hedged
asset/liability were to be sold or repaid before the related Swap Agreement
matures, the Swap Agreement would be marked to market and any gain/loss
classified with any gain/loss realized on the disposition of the hedged
asset/liability. Subsequently, the Swap Agreement would be marked to market and
the resulting change in fair value would be included in Investment Income in the
income statement. In the event that a Swap Agreement that is designated as a
hedge were to be terminated before its contractual maturity, any resulting
gain/loss would be credited/charged to the carrying value of the asset/liability
that it hedged.
DEFERRED ACQUISITION COSTS: Policy acquisition costs are deferred and
amortized, with interest, in relation to the incidence of estimated gross
profits to be realized over the estimated lives of the annuity contracts.
Estimated gross profits are composed of net interest income, net realized
investment gains and losses, variable annuity fees, surrender charges and direct
administrative expenses. Costs incurred to sell mutual funds are also deferred
and amortized over the estimated lives of the funds obtained. Deferred
acquisition costs consist of commissions and other costs that vary with, and are
primarily related to, the production or acquisition of new business.
As debt and equity securities available for sale are carried at aggregate
fair value, an adjustment is made to deferred acquisition costs equal to the
change in amortization that would have been recorded if such securities had been
sold at their stated aggregate fair value and the proceeds reinvested at current
yields. The change in this adjustment, net of tax, is included with the change
in net unrealized gains or losses on debt and equity securities available for
sale that is credited or charged directly to shareholder's equity. Deferred
Acquisition Costs have been decreased by $16,400,000 at September 30, 1997 and
increased by $4,200,000 at September 30, 1996 for this adjustment.
VARIABLE ANNUITY ASSETS AND LIABILITIES: The assets and liabilities
resulting from the receipt of variable annuity premiums are segregated in
separate accounts. The Company receives administrative fees for managing the
funds and other fees for assuming mortality and certain expense risks. Such fees
are included in Variable Annuity Fees in the income statement.
GOODWILL: Goodwill, amounting to $18,311,000 at September 30, 1997, is
amortized by using the straight-line method over periods averaging 25 years and
is included in Other Assets in the balance sheet. Goodwill is evaluated for
impairment when events or changes in economic conditions indicate that the
carrying amount may not be recoverable.
CONTRACTHOLDER RESERVES: Contractholder reserves for fixed annuity
contracts and guaranteed investment contracts are accounted for as
investment-type contracts in accordance with Statement of Financial Accounting
Standards No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments," and are recorded at accumulated value (premiums received, plus
accrued interest, less withdrawals and assessed fees).
FEE INCOME: Variable annuity fees, asset management fees and surrender
charges are recorded in income as earned. Net retained commissions are
recognized as income on a trade-date basis.
11
<PAGE> 48
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES: The Company is included in the consolidated federal income
tax return of the Parent and files as a "life insurance company" under the
provisions of the Internal Revenue Code of 1986. Income taxes have been
calculated as if the Company filed a separate return. Deferred income tax assets
and liabilities are recognized based on the difference between financial
statement carrying amounts and income tax bases of assets and liabilities using
enacted income tax rates and laws.
3. INVESTMENTS
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale by major category follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States
Government.............................. $ 18,496,000 $ 18,962,000
Mortgage-backed securities................. 636,018,000 649,196,000
Securities of public utilities............. 22,792,000 22,893,000
Corporate bonds and notes.................. 984,573,000 1,012,559,000
Redeemable preferred stocks................ 6,125,000 6,681,000
Other debt securities...................... 274,481,000 275,903,000
-------------- --------------
Total available for sale................... $1,942,485,000 $1,986,194,000
============== ==============
AT SEPTEMBER 30, 1996:
Securities of the United States
Government.............................. $ 311,458,000 $ 304,538,000
Mortgage-backed securities................. 747,653,000 741,876,000
Securities of public utilities............. 3,684,000 3,672,000
Corporate bonds and notes.................. 590,071,000 591,148,000
Redeemable preferred stocks................ 9,064,000 8,664,000
Other debt securities...................... 339,094,000 337,373,000
-------------- --------------
Total available for sale................... $2,001,024,000 $1,987,271,000
============== ==============
</TABLE>
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale by contractual maturity, as of September 30,
1997, follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
Due in one year or less...................... $ 19,067,000 $ 20,575,000
Due after one year through five years........ 277,350,000 281,296,000
Due after five years through ten years....... 631,083,000 650,242,000
Due after ten years.......................... 378,967,000 384,885,000
Mortgage-backed securities................... 636,018,000 649,196,000
-------------- --------------
Total available for sale..................... $1,942,485,000 $1,986,194,000
============== ==============
</TABLE>
Actual maturities of bonds, notes and redeemable preferred stocks will
differ from those shown above due to prepayments and redemptions.
12
<PAGE> 49
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
Gross unrealized gains and losses on bonds, notes and redeemable preferred
stocks available for sale by major category follow:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
GAINS LOSSES
----------- ------------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States Government..... $ 498,000 $ (32,000)
Mortgage-backed securities..................... 14,998,000 (1,820,000)
Securities of public utilities................. 141,000 (40,000)
Corporate bonds and notes...................... 28,691,000 (705,000)
Redeemable preferred stocks.................... 556,000 --
Other debt securities.......................... 1,569,000 (147,000)
----------- ------------
Total available for sale....................... $46,453,000 $ (2,744,000)
=========== ============
AT SEPTEMBER 30, 1996:
Securities of the United States Government..... $ 284,000 $ (7,204,000)
Mortgage-backed securities..................... 7,734,000 (13,511,000)
Securities of public utilities................. 1,000 (13,000)
Corporate bonds and notes...................... 11,709,000 (10,632,000)
Redeemable preferred stocks.................... 16,000 (416,000)
Other debt securities.......................... 431,000 (2,152,000)
----------- ------------
Total available for sale....................... $20,175,000 $(33,928,000)
=========== ============
</TABLE>
At September 30, 1997, gross unrealized gains on equity securities
available for sale aggregated $1,004,000 and there were no unrealized losses. At
September 30, 1996, gross unrealized gains on equity securities available for
sale aggregated $1,368,000 and gross unrealized losses aggregated $309,000.
13
<PAGE> 50
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
Gross realized investment gains and losses on sales of investments are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
BONDS, NOTES AND REDEEMABLE
PREFERRED STOCKS:
Available for sale:
Realized gains............................... $ 22,179,000 $ 14,532,000 $ 15,983,000
Realized losses.............................. (25,310,000) (10,432,000) (21,842,000)
Held for investment:
Realized gains............................... -- -- 2,413,000
Realized losses.............................. -- -- (586,000)
COMMON STOCKS:
Realized gains.................................. 4,002,000 511,000 994,000
Realized losses................................. (312,000) (3,151,000) (114,000)
OTHER INVESTMENTS:
Realized gains.................................. 2,450,000 1,135,000 3,561,000
Realized losses................................. -- -- (12,000)
IMPAIRMENT WRITEDOWNS............................. (20,403,000) (15,950,000) (4,760,000)
------------ ------------ ------------
Total net realized investment losses.............. $(17,394,000) $(13,355,000) $ (4,363,000)
============ ============ ============
</TABLE>
The sources and related amounts of investment income are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Short-term investments............................ $ 11,780,000 $ 10,647,000 $ 8,308,000
Bonds, notes and redeemable preferred stocks...... 163,038,000 140,387,000 107,643,000
Mortgage loans.................................... 17,632,000 8,701,000 7,419,000
Common stocks..................................... 16,000 8,000 3,000
Real estate....................................... (296,000) (196,000) (51,000)
Limited partnerships.............................. 6,725,000 4,073,000 5,128,000
Other invested assets............................. 11,864,000 1,011,000 1,016,000
------------ ------------ ------------
Total investment income......................... $210,759,000 $164,631,000 $129,466,000
============ ============ ============
</TABLE>
Expenses incurred to manage the investment portfolio amounted to $2,050,000
for the year ended September 30, 1997, $1,737,000 for the year ended September
30, 1996, and $1,983,000 for the year ended September 30, 1995 and are included
in General and Administrative Expenses in the income statement.
At September 30, 1997, no investment exceeded 10% of the Company's
consolidated shareholder's equity.
At September 30, 1997, mortgage loans were collateralized by properties
located in 21 states, with loans totaling approximately 13% of the aggregate
carrying value of the portfolio secured by properties located in New York and
approximately 12% by properties located in California. No more than 10% of the
portfolio was secured by properties in any other single state.
14
<PAGE> 51
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
At September 30, 1997, bonds, notes and redeemable preferred stocks
included $216,877,000 (fair value of $227,169,000) of bonds and notes not rated
investment grade. The Company had no material concentrations of
noninvestment-grade assets at September 30, 1997.
At September 30, 1997, the amortized cost of investments in default as to
the payment of principal or interest was $1,378,000, consisting of $500,000 of
non-investment-grade bonds and $878,000 of mortgage loans. Such nonperforming
investments had an estimated fair value of $1,378,000.
As a component of its asset and liability management strategy, the Company
utilizes Swap Agreements to match assets more closely to liabilities. Swap
Agreements are agreements to exchange with a counterparty interest rate payments
of differing character (for example, variable-rate payments exchanged for
fixed-rate payments) based on an underlying principal balance (notional
principal) to hedge against interest rate changes. The Company typically
utilizes Swap Agreements to create a hedge that effectively converts
floating-rate assets and liabilities to fixed-rate instruments. At September 30,
1997, the Company had one outstanding Swap Agreement with a notional principal
amount of $15.9 million, which matures in December, 2024. The net interest paid
amounted to $0.1 million for the year ended September 30, 1997, and is included
in Interest Expense on Guaranteed Investment Contracts in the income statement.
At September 30, 1997, $5,276,000 of bonds, at amortized cost, were on
deposit with regulatory authorities in accordance with statutory requirements.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value disclosures are limited to reasonable
estimates of the fair value of only the Company's financial instruments. The
disclosures do not address the value of the Company's recognized and
unrecognized nonfinancial assets (including its real estate investments and
other invested assets except for cost-method partnerships) and liabilities or
the value of anticipated future business. The Company does not plan to sell most
of its assets or settle most of its liabilities at these estimated fair values.
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Selling expenses and potential taxes
are not included. The estimated fair value amounts were determined using
available market information, current pricing information and various valuation
methodologies. If quoted market prices were not readily available for a
financial instrument, management determined an estimated fair value.
Accordingly, the estimates may not be indicative of the amounts the financial
instruments could be exchanged for in a current or future market transaction.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND SHORT TERM INVESTMENTS: Carrying value is considered to be a
reasonable estimate of fair value.
BONDS, NOTES AND REDEEMABLE PREFERRED STOCKS: Fair value is based
principally on independent pricing services, broker quotes and other independent
information.
MORTGAGE LOANS: Fair values are primarily determined by discounting future
cash flows to the present at current market rates, using expected prepayment
rates.
15
<PAGE> 52
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COMMON STOCKS: Fair value is based principally on independent pricing
services, broker quotes and other independent information.
COST-METHOD PARTNERSHIPS: Fair value of limited partnerships accounted for
by using the cost method is based upon the fair value of the net assets of the
partnerships as determined by the general partners.
VARIABLE ANNUITY ASSETS: Variable annuity assets are carried at the market
value of the underlying securities.
RECEIVABLE FROM (PAYABLE TO) BROKERS FOR SALES (PURCHASES) OF
SECURITIES: Such obligations represent net transactions of a short-term nature
for which the carrying value is considered a reasonable estimate of fair value.
RESERVES FOR FIXED ANNUITY CONTRACTS: Deferred annuity contracts and single
premium life contracts are assigned a fair value equal to current net surrender
value. Annuitized contracts are valued based on the present value of future cash
flows at current pricing rates.
RESERVES FOR GUARANTEED INVESTMENT CONTRACTS: Fair value is based on the
present value of future cash flows at current pricing rates and is net of the
estimated fair value of hedging Swap Agreements, determined from independent
broker quotes.
VARIABLE ANNUITY LIABILITIES: Fair values of contracts in the accumulation
phase are based on net surrender values. Fair values of contracts in the payout
phase are based on the present value of future cash flows at assumed investment
rates.
SUBORDINATED NOTES PAYABLE TO PARENT: Fair value is estimated based on the
quoted market prices for similar issues.
16
<PAGE> 53
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Company's financial instruments at
September 30, 1997 and 1996, compared with their respective carrying values, are
as follows:
<TABLE>
<CAPTION>
CARRYING
VALUE FAIR VALUE
-------------- --------------
<S> <C> <C>
1997:
ASSETS:
Cash and short-term investments........ $ 113,580,000 $ 113,580,000
Bonds, notes and redeemable preferred
stocks.............................. 1,986,194,000 1,986,194,000
Mortgage loans......................... 339,530,000 354,495,000
Common stocks.......................... 1,275,000 1,275,000
Cost-method partnerships............... 46,880,000 84,186,000
Variable annuity assets................ 9,343,200,000 9,343,200,000
LIABILITIES:
Reserves for fixed annuity contracts... 2,098,803,000 2,026,258,000
Reserves for guaranteed investment
contracts........................... 295,175,000 295,175,000
Payable to brokers for purchases of
securities.......................... 263,000 263,000
Variable annuity liabilities........... 9,343,200,000 9,077,200,000
Subordinated notes payable to Parent... 36,240,000 37,393,000
============== ==============
1996:
ASSETS:
Cash and short-term investments........ $ 122,058,000 $ 122,058,000
Bonds, notes and redeemable preferred
stocks.............................. 1,987,271,000 1,987,271,000
Mortgage loans......................... 98,284,000 102,112,000
Common stocks.......................... 3,970,000 3,970,000
Cost-method partnerships............... 45,070,000 70,553,000
Receivable from brokers for sales of
securities.......................... 52,348,000 52,348,000
Variable annuity assets................ 6,311,557,000 6,311,557,000
LIABILITIES:
Reserves for fixed annuity contracts... 1,789,962,000 1,738,784,000
Reserves for guaranteed investment
contracts........................... 415,544,000 416,695,000
Variable annuity liabilities........... 6,311,557,000 6,117,508,000
Subordinated notes payable to Parent... 35,832,000 37,339,000
============== ==============
</TABLE>
5. SUBORDINATED NOTES PAYABLE TO PARENT
Subordinated notes payable to Parent equalled $36,240,000 at an interest
rate of 9% at September 30, 1997 and require principal payments of $7,500,000 in
1998, $23,060,000 in 1999 and $5,400,000 in 2000.
17
<PAGE> 54
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. CONTINGENT LIABILITIES
The Company has entered into three agreements in which it has provided
liquidity support for certain short-term securities of three municipalities by
agreeing to purchase such securities in the event there is no other buyer in the
short-term marketplace. In return the Company receives a fee. The maximum
liability under these guarantees is $242,600,000. Management does not anticipate
any material future losses with respect to these liquidity support facilities.
The Company is involved in various kinds of litigation common to its
businesses. These cases are in various stages of development and, based on
reports of counsel, management believes that provisions made for potential
losses relating to such litigation are adequate and any further liabilities and
costs will not have a material adverse impact upon the Company's financial
position or results of operations.
7. SHAREHOLDER'S EQUITY
The Company is authorized to issue 4,000 shares of its $1,000 par value
Common Stock. At September 30, 1997 and 1996, 3,511 shares were outstanding.
Changes in shareholder's equity are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ADDITIONAL PAID-IN CAPITAL:
Beginning balance......... $280,263,000 $252,876,000 $252,876,000
Capital contributions
received............... 28,411,000 27,387,000 --
----------- ----------- -----------
Ending balance............ $308,674,000 $280,263,000 $252,876,000
=========== =========== ===========
RETAINED EARNINGS:
Beginning balance......... 207,002,000 191,346,000 152,088,000
Net income................ 63,126,000 45,056,000 39,258,000
Dividend paid............. (25,500,000) (29,400,000) --
----------- ----------- -----------
Ending balance............ $244,628,000 $207,002,000 $191,346,000
=========== =========== ===========
NET UNREALIZED GAINS/LOSSES
ON DEBT AND EQUITY
SECURITIES AVAILABLE FOR
SALE:
Beginning balance......... $ (5,521,000) $ (5,673,000) $(24,953,000)
Change in net unrealized
gains/losses on debt
securities available
for sale............... 57,463,000 (2,904,000) 71,302,000
Change in net unrealized
gains/losses on equity
securities available
for sale............... (55,000) 3,538,000 (1,240,000)
Change in adjustment to
deferred acquisition
costs.................. (20,600,000) (400,000) (40,400,000)
Tax effects of net
changes................ (12,882,000) (82,000) (10,382,000)
----------- ----------- -----------
Ending balance............ $ 18,405,000 $ (5,521,000) $ (5,673,000)
=========== =========== ===========
</TABLE>
Dividends that the Company may pay to its shareholder in any year without
prior approval of the Arizona Department of Insurance are limited by statute.
The maximum amount of dividends which
18
<PAGE> 55
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SHAREHOLDER'S EQUITY (CONTINUED)
can be paid to shareholders of insurance companies domiciled in the state of
Arizona without obtaining the prior approval of the Insurance Commissioner is
limited to the lesser of either 10% of the preceding year's statutory surplus or
the preceding year's statutory net gain from operations. Dividends in the
amounts of $25,500,000 and $29,400,000 were paid on April 1, 1997 and March 18,
1996, respectively. No dividends were paid in fiscal year 1995.
Under statutory accounting principles utilized in filings with insurance
regulatory authorities, the Company's net income for the nine months ended
September 30, 1997 was $45,743,000. The statutory net income for the year ended
December 31, 1996 was $27,928,000 and for the year ended December 31, 1995 was
$30,673,000. The Company's statutory capital and surplus was $325,712,000 at
September 30, 1997, $311,176,000 at December 31, 1996 and $294,767,000 at
December 31, 1995.
8. INCOME TAXES
The components of the provisions for federal income taxes on pretax income
consist of the following:
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT
GAINS (LOSSES) OPERATIONS TOTAL
-------------- ------------ ------------
<S> <C> <C> <C>
1997:
Currently payable................. $ (3,635,000) $ 50,828,000 $ 47,193,000
Deferred.......................... (2,258,000) (13,766,000) (16,024,000)
------------ ------------ ------------
Total income tax
expense............... $ (5,893,000) $ 37,062,000 $ 31,169,000
============ ============ ============
1996:
Currently payable................. $ 5,754,000 $ 21,849,000 $ 27,603,000
Deferred.......................... (10,347,000) 6,996,000 (3,351,000)
------------ ------------ ------------
Total income tax
expense............... $ (4,593,000) $ 28,845,000 $ 24,252,000
============ ============ ============
1995:
Currently payable................. $ 4,248,000 $ 22,980,000 $ 27,228,000
Deferred.......................... (6,113,000) 4,624,000 (1,489,000)
------------ ------------ ------------
Total income tax
expense............... $ (1,865,000) $ 27,604,000 $ 25,739,000
============ ============ ============
</TABLE>
19
<PAGE> 56
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES (CONTINUED)
Income taxes computed at the United States federal income tax rate of 35%
and income taxes provided differ as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed at statutory
rate........................... $33,003,000 $24,258,000 $22,749,000
Increases (decreases) resulting
from:
Amortization of differences
between book and tax bases
of net assets acquired...... 666,000 464,000 3,049,000
State income taxes, net of
federal tax benefit......... 1,950,000 2,070,000 437,000
Dividends-received deduction... (4,270,000) (2,357,000) --
Tax credits.................... (318,000) (257,000) (168,000)
Other, net..................... 138,000 74,000 (328,000)
----------- ----------- -----------
Total income tax
expense.............. $31,169,000 $24,252,000 $25,739,000
=========== =========== ===========
</TABLE>
For United States federal income tax purposes, certain amounts from life
insurance operations are accumulated in a memorandum policyholders' surplus
account and are taxed only when distributed to shareholders or when such account
exceeds prescribed limits. The accumulated policyholders' surplus was
$14,300,000 at September 30, 1997. The Company does not anticipate any
transactions which would cause any part of this surplus to be taxable.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting purposes. The significant
components of the liability for Deferred Income Taxes are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
1997 1996
------------- ------------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Investments.................................... $ 13,160,000 $ 15,036,000
Deferred acquisition costs..................... 154,949,000 136,747,000
State income taxes............................. 1,777,000 1,466,000
Net unrealized gains on debt and equity
securities available for sale................ 9,910,000 --
------------- ------------
Total deferred tax liabilities....... 179,796,000 153,249,000
------------- ------------
DEFERRED TAX ASSETS:
Contractholder reserves........................ (108,090,000) (77,522,000)
Guaranty fund assessments...................... (2,707,000) (1,031,000)
Other assets................................... (1,952,000) (1,534,000)
Net unrealized losses on debt and equity
securities available for sale................ -- (2,973,000)
------------- ------------
Total deferred tax assets............ (112,749,000) (83,060,000)
------------- ------------
Deferred income taxes.......................... $ 67,047,000 $ 70,189,000
============= ============
</TABLE>
20
<PAGE> 57
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. RELATED PARTY MATTERS
The Company pays commissions to two affiliated companies, SunAmerica
Securities, Inc. and Advantage Capital Corp. Commissions paid to these
broker-dealers totaled $25,492,000 in 1997, $16,906,000 in 1996, and $9,435,000
in 1995. These broker-dealers, when combined with the Company's wholly owned
broker-dealer, represent a significant portion of the Company's business,
amounting to approximately 36.1%, 38.3%, and 40.6% of premiums in 1997, 1996,
and 1995, respectively. The Company also sells its products through unaffiliated
broker-dealers, the largest two of which represented approximately 19.2% and
10.1% of premiums in 1997, 19.7% and 10.2% in 1996, and 18.8% and 4.3% in 1995,
respectively.
The Company purchases administrative, investment management, accounting,
marketing and data processing services from SunAmerica Financial, Inc., whose
purpose is to provide services to the SunAmerica companies. Amounts paid for
such services totaled $86,116,000 for the year ended September 30, 1997,
$65,351,000 for the year ended September 30, 1996 and $42,083,000 for the year
ended September 30, 1995. Such amounts are included in General and
Administrative Expenses in the income statement.
The Parent made capital contributions of $28,411,000 in December, 1996 and
$27,387,000 in December 1995 to the Company, through the Company's direct
parent, in exchange for the termination of its guaranty with respect to certain
real estate owned in Arizona. Accordingly, the Company reduced the carrying
value of this real estate to estimated fair value to reflect the termination of
the guaranty.
During the year ended September 30, 1995, the Company sold to the Parent
real estate for cash equal to its carrying value of $29,761,000.
During the year ended September 30, 1997, the Company sold various invested
assets to SunAmerica Life Insurance Company and to CalAmerica Life Insurance
Company for cash equal to their current market values of $15,776,000 and
$15,000, respectively. The Company recorded net gains aggregating $276,000 on
such transactions.
During the year ended September 30, 1997, the Company also purchased
certain invested assets from SunAmerica Life Insurance Company and from
CalAmerica Life Insurance Company for cash equal to their current market values
of $8,717,000 and $284,000, respectively.
During the year ended September 30, 1996, the Company sold various invested
assets to the Parent and to SunAmerica Life Insurance Company for cash equal to
their current market values of $274,000 and $47,321,000, respectively. The
Company recorded net losses aggregating $3,000 on such transactions.
During the year ended September 30, 1996, the Company also purchased
certain invested assets from SunAmerica Life Insurance Company for cash equal to
their current market values, which aggregated $28,379,000.
21
<PAGE> 58
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. BUSINESS SEGMENTS
Summarized data for the Company's business segments follow:
<TABLE>
<CAPTION>
TOTAL
DEPRECIATION
AND
TOTAL AMORTIZATION PRETAX TOTAL
REVENUES EXPENSE INCOME ASSETS
------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
1997:
Annuity operations................ $332,845,000 $55,675,000 $74,792,000 $12,438,021,000
Broker-dealer operations.......... 38,005,000 689,000 16,705,000 51,400,000
Asset management.................. 35,661,000 16,357,000 2,798,000 81,518,000
------------ ----------- ----------- ---------------
Total................... $406,511,000 $72,721,000 $94,295,000 $12,570,939,000
============ =========== =========== ===============
1996:
Annuity operations................ $256,681,000 $43,974,000 $53,827,000 $ 9,092,770,000
Broker-dealer operations.......... 31,053,000 449,000 13,033,000 37,355,000
Asset management.................. 33,047,000 18,295,000 2,448,000 74,410,000
------------ ----------- ----------- ---------------
Total................... $320,781,000 $62,718,000 $69,308,000 $ 9,204,535,000
============ =========== =========== ===============
1995:
Annuity operations................ $211,587,000 $38,350,000 $55,462,000 $ 7,667,946,000
Broker-dealer operations.......... 24,194,000 411,000 9,025,000 29,241,000
Asset management.................. 34,427,000 24,069,000 510,000 86,510,000
------------ ----------- ----------- ---------------
Total................... $270,208,000 $62,830,000 $64,997,000 $ 7,783,697,000
============ =========== =========== ===============
</TABLE>
22
<PAGE> 59
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1996
23
<PAGE> 60
REPORT OF INDEPENDENT ACCOUNTANTS
February 14, 1997
To the Board of Directors of Anchor National Life Insurance Company
and the Contractholders of its separate account, Variable Annuity Account One
In our opinion, the accompanying statement of net assets, including the schedule
of portfolio investments, and the related statements of operations and of
changes in net assets present fairly, in all material respects, the financial
position of each of the Variable Accounts constituting Variable Annuity Account
One, a separate account of Anchor National Life Insurance Company (the "Separate
Account") at December 31, 1996, the results of their operations for the year
then ended, and the changes in their net assets for each of the two years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Separate Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at December 31, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
24
<PAGE> 61
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital Natural Growth and Strategic
Securities Appreciation Growth Resources Income Multi-Asset
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $43,908,274 $153,845,004 $191,514,411 $15,459,178 $30,540,181 $53,602,627
Liabilities 0 0 0 0 0 0
-------------------------------------------------------------------------------------
Net Assets $43,908,274 $153,845,004 $191,514,411 $15,459,178 $30,540,181 $53,602,627
=====================================================================================
Accumulation units outstanding 3,043,190 4,347,548 4,556,465 788,393 1,345,829 2,579,111
=====================================================================================
Unit value of accumulation units $ 14.43 $ 35.39 $ 42.03 $ 19.61 $ 22.69 $ 20.78
=====================================================================================
</TABLE>
<TABLE>
<CAPTION>
Multi-Asset
Portfolio
------------
<S> <C>
Assets:
Investments in Anchor Series Trust,
at market value $126,637,768
Liabilities 0
------------
Net Assets $126,637,768
============
Accumulation units outstanding 5,585,000
============
Unit value of accumulation units $ 22.67
============
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 62
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Government and Money
High Yield Target '98 Fixed Income Quality Bond Market
Portfolio Portfolio Portfolio Portfolio Portfolio Total
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $43,376,383 $8,888,336 $21,195,925 $92,354,318 $70,999,994 $852,322,399
Liabilities 0 0 0 0 0 0
---------------------------------------------------------------------------------------
Net Assets $43,376,383 $8,888,336 $21,195,925 $92,354,318 $70,999,994 $852,322,399
=======================================================================================
Accumulation units outstanding 1,872,381 464,110 823,722 3,421,826 4,089,701
=========================================================================
Unit value of accumulation units $ 23.17 $ 19.15 $ 25.73 $ 26.99 $ 17.36
=========================================================================
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 63
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
Market Value Market
Variable Accounts Shares Per Share Value Cost
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Securities Portfolio 3,392,728 $12.94 $ 43,908,274 $ 37,575,221
Capital Appreciation Portfolio 5,494,803 28.00 153,845,004 121,539,418
Growth Portfolio 8,256,817 23.19 191,514,411 164,773,451
Natural Resources Portfolio 916,564 16.87 15,459,178 13,042,036
Growth and Income Portfolio 2,247,545 13.59 30,540,181 28,242,357
Strategic Multi-Asset Portfolio 4,393,413 12.20 53,602,627 50,209,491
Multi-Asset Portfolio 9,485,977 13.35 126,637,768 112,053,789
High Yield Portfolio 5,174,531 8.38 43,376,383 43,595,761
Target '98 Portfolio 761,563 11.67 8,888,336 9,769,238
Fixed Income Portfolio 1,593,279 13.30 21,195,925 21,799,374
Government and Quality Bond Portfolio 6,755,508 13.67 92,354,318 91,077,447
Money Market Portfolio 70,999,994 1.00 70,999,994 70,999,994
-----------------------------
$852,322,399 $764,677,577
=============================
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 64
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital Natural
Securities Appreciation Growth Resources
Portfolio Portfolio Portfolio Portfolio
---------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 735,738 $ 5,162,697 $ 8,385,451 $ 350,312
---------------------------------------------------------
Total investment income 735,738 5,162,697 8,385,451 350,312
---------------------------------------------------------
Expenses:
Mortality risk charge (430,512) (1,298,474) (1,644,804) (155,149)
Expense risk charge (167,421) (504,962) (639,646) (60,336)
Administration expense charge (71,752) (216,412) (274,134) (25,858)
---------------------------------------------------------
Total expenses (669,685) (2,019,848) (2,558,584) (241,343)
---------------------------------------------------------
Net investment income 66,053 3,142,849 5,826,867 108,969
---------------------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 24,250,291 74,786,914 57,272,196 10,084,149
Cost of shares sold (21,294,859) (58,119,436) (53,429,983) (8,662,997)
---------------------------------------------------------
Net realized gains (losses) from securities transactions 2,955,432 16,667,478 3,842,213 1,421,152
---------------------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period 5,038,624 22,954,220 (1,974,086) 1,970,309
End of period 6,333,053 32,305,586 26,740,960 2,417,142
---------------------------------------------------------
Change in net unrealized appreciation/depreciation
of investments 1,294,429 9,351,366 28,715,046 446,833
---------------------------------------------------------
Increase in net assets from operations $ 4,315,914 $29,161,693 $38,384,126 $ 1,976,954
=========================================================
</TABLE>
<TABLE>
<CAPTION>
Growth and Strategic
Income Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio
-------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $1,580,249 $ 5,161,895 $12,750,535
-------------------------------------------
Total investment income 1,580,249 5,161,895 12,750,535
-------------------------------------------
Expenses:
Mortality risk charge (256,782) (495,281) (1,183,297)
Expense risk charge (99,860) (192,609) (460,171)
Administration expense charge (42,797) (82,547) (197,216)
-------------------------------------------
Total expenses (399,439) (770,437) (1,840,684)
-------------------------------------------
Net investment income 1,180,810 4,391,458 10,909,851
-------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 7,515,404 14,319,044 30,771,722
Cost of shares sold (7,462,351) (13,414,467) (27,196,430)
-------------------------------------------
Net realized gains (losses) from securities transactions 53,053 904,577 3,575,292
-------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period (1,244,238) 1,815,862 13,965,456
End of period 2,297,824 3,393,136 14,583,979
-------------------------------------------
Change in net unrealized appreciation/depreciation
of investments 3,542,062 1,577,274 618,523
-------------------------------------------
Increase in net assets from operations $4,775,925 $ 6,873,309 $15,103,666
===========================================
</TABLE>
See accompanying notes to financial statements.
28
<PAGE> 65
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
High Yield Target '98 Fixed Income
Portfolio Portfolio Portfolio
------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 4,401,649 $1,049,652 $1,762,787
------------------------------------------
Total investment income 4,401,649 1,049,652 1,762,787
------------------------------------------
Expenses:
Mortality risk charge (378,860) (88,871) (202,458)
Expense risk charge (147,335) (34,561) (78,734)
Administration expense charge (63,143) (14,811) (33,743)
------------------------------------------
Total expenses (589,338) (138,243) (314,935)
------------------------------------------
Net investment income 3,812,311 911,409 1,447,852
------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 25,265,738 2,868,095 5,822,221
Cost of shares sold (25,274,364) (3,029,963) (5,846,481)
------------------------------------------
Net realized gains (losses) from securities transactions (8,626) (161,868) (24,260)
------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period (555,326) (342,310) 696,669
End of period (219,378) (880,902) (603,449)
------------------------------------------
Change in net unrealized appreciation/depreciation
of investments 335,948 (538,592) (1,300,118)
------------------------------------------
Increase in net assets from operations $ 4,139,633 $ 210,949 $ 123,474
==========================================
</TABLE>
<TABLE>
<CAPTION>
Government and Money
Quality Bond Market
Portfolio Portfolio Total
-------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 6,496,614 $ 4,059,088 $ 51,896,667
-------------------------------------------
Total investment income 6,496,614 4,059,088 51,896,667
-------------------------------------------
Expenses:
Mortality risk charge (915,000) (748,092) (7,797,580)
Expense risk charge (355,833) (290,925) (3,032,393)
Administration expense charge (152,500) (124,681) (1,299,594)
-------------------------------------------
Total expenses (1,423,333) (1,163,698) (12,129,567)
-------------------------------------------
Net investment income 5,073,281 2,895,390 39,767,100
-------------------------------------------
Net realized gains (losses) from securities transactions:
Proceeds from shares sold 43,176,758 121,952,424 418,084,956
Cost of shares sold (42,037,403) (121,952,424) (387,721,158)
-------------------------------------------
Net realized gains (losses) from securities transactions 1,139,355 0 30,363,798
-------------------------------------------
Net unrealized appreciation (depreciation) of investments:
Beginning of period 5,882,691 0 48,207,871
End of period 1,276,871 0 87,644,822
-------------------------------------------
Change in net unrealized appreciation/depreciation
of investments (4,605,820) 0 39,436,951
-------------------------------------------
Increase in net assets from operations $ 1,606,816 $ 2,895,390 $109,567,849
===========================================
</TABLE>
See accompanying notes to financial statements.
29
<PAGE> 66
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1996
<TABLE>
<CAPTION>
Foreign Capital
Securities Appreciation Growth
Portfolio Portfolio Portfolio
----------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 66,053 $ 3,142,849 $ 5,826,867
Net realized gains (losses) from securities transactions 2,955,432 16,667,478 3,842,213
Change in net unrealized appreciation/depreciation
of investments 1,294,429 9,351,366 28,715,046
----------------------------------------------------
Increase in net assets from operations 4,315,914 29,161,693 38,384,126
----------------------------------------------------
From capital transactions:
Net proceeds from units sold 1,410,072 7,145,137 5,740,680
Cost of units redeemed (11,279,577) (25,093,611) (32,630,494)
Net transfers 830,202 6,362,947 (3,138,749)
----------------------------------------------------
Decrease in net assets from capital transactions (9,039,303) (11,585,527) (30,028,563)
----------------------------------------------------
Increase (decrease) in net assets (4,723,389) 17,576,166 8,355,563
Net assets at beginning of period 48,631,663 136,268,838 183,158,848
----------------------------------------------------
Net assets at end of period $ 43,908,274 $153,845,004 $191,514,411
====================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 101,568 220,156 154,082
Units redeemed (817,447) (775,025) (869,946)
Units transferred 55,372 151,068 (102,508)
----------------------------------------------------
Decrease in units outstanding (660,507) (403,801) (818,372)
Beginning units 3,703,697 4,751,349 5,374,837
----------------------------------------------------
Ending units 3,043,190 4,347,548 4,556,465
====================================================
</TABLE>
<TABLE>
<CAPTION>
Natural Growth and Strategic
Resources Income Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio Portfolio
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 108,969 $ 1,180,810 $ 4,391,458 $ 10,909,851
Net realized gains (losses) from securities transactions 1,421,152 53,053 904,577 3,575,292
Change in net unrealized appreciation/depreciation
of investments 446,833 3,542,062 1,577,274 618,523
--------------------------------------------------------------
Increase in net assets from operations 1,976,954 4,775,925 6,873,309 15,103,666
--------------------------------------------------------------
From capital transactions:
Net proceeds from units sold 743,539 768,762 1,394,909 2,667,676
Cost of units redeemed (3,294,148) (5,525,786) (13,325,115) (28,574,054)
Net transfers (1,345,139) 1,394,678 (309,802) (2,508,689)
--------------------------------------------------------------
Decrease in net assets from capital transactions (3,895,748) (3,362,346) (12,240,008) (28,415,067)
--------------------------------------------------------------
Increase (decrease) in net assets (1,918,794) 1,413,579 (5,366,699) (13,311,401)
Net assets at beginning of period 17,377,972 29,126,602 58,969,326 139,949,169
--------------------------------------------------------------
Net assets at end of period $15,459,178 $30,540,181 $ 53,602,627 $126,637,768
==============================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 39,724 37,337 72,078 127,230
Units redeemed (176,283) (268,558) (688,404) (1,349,877)
Units transferred (71,998) 56,482 (17,416) (122,385)
--------------------------------------------------------------
Decrease in units outstanding (208,557) (174,739) (633,742) (1,345,032)
Beginning units 996,950 1,520,568 3,212,853 6,930,032
--------------------------------------------------------------
Ending units 788,393 1,345,829 2,579,111 5,585,000
==============================================================
</TABLE>
See accompanying notes to financial statements.
30
<PAGE> 67
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1996
(Continued)
<TABLE>
<CAPTION>
High Yield Target '98 Fixed Income
Portfolio Portfolio Portfolio
-------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 3,812,311 $ 911,409 $ 1,447,852
Net realized gains (losses) from securities transactions (8,626) (161,868) (24,260)
Change in net unrealized appreciation/depreciation
of investments 335,948 (538,592) (1,300,118)
-------------------------------------------------
Increase in net assets from operations 4,139,633 210,949 123,474
-------------------------------------------------
From capital transactions:
Net proceeds from units sold 1,093,658 142,881 541,369
Cost of units redeemed (9,086,041) (2,133,216) (4,270,211)
Net transfers 3,313,583 (158,288) (814,814)
-------------------------------------------------
Decrease in net assets from capital transactions (4,678,800) (2,148,623) (4,543,656)
-------------------------------------------------
Increase (decrease) in net assets (539,167) (1,937,674) (4,420,182)
Net assets at beginning of period 43,915,550 10,826,010 25,616,107
-------------------------------------------------
Net assets at end of period $43,376,383 $ 8,888,336 $21,195,925
=================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 50,266 7,701 21,703
Units redeemed (418,106) (113,501) (170,410)
Units transferred 152,372 (8,240) (33,552)
-------------------------------------------------
Decrease in units outstanding (215,468) (114,040) (182,259)
Beginning units 2,087,849 578,150 1,005,981
-------------------------------------------------
Ending units 1,872,381 464,110 823,722
=================================================
</TABLE>
<TABLE>
<CAPTION>
Government and Money
Quality Bond Market
Portfolio Portfolio TOTAL
------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income $ 5,073,281 $ 2,895,390 $ 39,767,100
Net realized gains (losses) from securities transactions 1,139,355 0 30,363,798
Change in net unrealized appreciation/depreciation
of investments (4,605,820) 0 39,436,951
------------------------------------------------------
Increase in net assets from operations 1,606,816 2,895,390 109,567,849
------------------------------------------------------
From capital transactions:
Net proceeds from units sold 1,755,805 3,961,335 27,365,823
Cost of units redeemed (21,318,342) (28,460,251) 184,990,846)
Net transfers 2,922,447 3,414,162 9,962,538
------------------------------------------------------
Decrease in net assets from capital transactions (16,640,090) (21,084,754) 147,662,485)
------------------------------------------------------
Increase (decrease) in net assets (15,033,274) (18,189,364) (38,094,636)
Net assets at beginning of period 107,387,592 89,189,358 890,417,035
------------------------------------------------------
Net assets at end of period $ 92,354,318 $ 70,999,994 $852,322,399
======================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 67,039 232,326
Units redeemed (815,019) (1,671,245)
Units transferred 132,291 209,075
----------------------------------
Decrease in units outstanding (615,689) (1,229,844)
Beginning units 4,037,515 5,319,545
----------------------------------
Ending units 3,421,826 4,089,701
==================================
</TABLE>
See accompanying notes to financial statements.
31
<PAGE> 68
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1995
<TABLE>
<CAPTION>
Foreign Capital
Securities Appreciation Growth
Portfolio Portfolio Portfolio
--------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (439,200) $ 395,451 $ 25,213,259
Net realized gains (losses) from securities transactions 1,113,851 5,707,170 (575,039)
Change in net unrealized appreciation/depreciation
of investments 4,455,453 28,081,049 12,342,402
--------------------------------------------------
Increase in net assets from operations 5,130,104 34,183,670 36,980,622
--------------------------------------------------
From capital transactions:
Net proceeds from units sold 1,844,536 6,038,119 5,576,418
Cost of units redeemed (12,893,518) (24,572,567) (34,291,600)
Net transfers (8,461,827) 9,584,951 14,763,808
--------------------------------------------------
Decrease in net assets from capital transactions (19,510,809) (8,949,497) (13,951,374)
--------------------------------------------------
Increase (decrease) in net assets (14,380,705) 25,234,173 23,029,248
Net assets at beginning of period 63,012,368 111,034,665 160,129,600
--------------------------------------------------
Net assets at end of period $ 48,631,663 $136,268,838 $183,158,848
==================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 153,711 239,672 183,402
Units redeemed (1,068,356) (970,609) (1,114,859)
Units transferred (710,014) 346,475 453,402
--------------------------------------------------
Decrease in units outstanding (1,624,659) (384,462) (478,055)
Beginning units 5,328,356 5,135,811 5,852,892
--------------------------------------------------
Ending units 3,703,697 4,751,349 5,374,837
==================================================
</TABLE>
<TABLE>
<CAPTION>
Natural Convertible Strategic
Resources Securities Multi-Asset Multi-Asset
Portfolio Portfolio Portfolio Portfolio
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 319,250 $ 2,811,654 $ 8,015,433 $13,356,300
Net realized gains (losses) from securities transactions 1,033,678 (404,909) 675,262 2,918,358
Change in net unrealized appreciation/depreciation
of investments 1,426,623 1,711,269 2,493,083 12,789,024
-----------------------------------------------------------------
Increase in net assets from operations 2,779,551 4,118,014 11,183,778 29,063,682
-----------------------------------------------------------------
From capital transactions:
Net proceeds from units sold 832,958 873,411 1,494,023 2,952,700
Cost of units redeemed (3,908,502) (7,113,626) (12,719,207) (31,915,061)
Net transfers (685,618) (656,776) (995,239) 2,947,211
-----------------------------------------------------------------
Decrease in net assets from capital transactions (3,761,162) (6,896,991) (12,220,423) (26,015,150)
-----------------------------------------------------------------
Increase (decrease) in net assets (981,611) (2,778,977) (1,036,645) 3,048,532
Net assets at beginning of period 18,359,583 31,905,579 60,005,971 136,900,637
-----------------------------------------------------------------
Net assets at end of period $17,377,972 $29,126,602 $58,969,326 $139,949,169
=================================================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 51,050 49,120 90,942 162,782
Units redeemed (238,431) (402,031) (771,293) (1,755,404)
Units transferred (35,487) (41,029) (64,731) 168,213
-----------------------------------------------------------------
Decrease in units outstanding (222,868) (393,940) (745,082) (1,424,409)
Beginning units 1,219,818 1,914,508 3,957,935 8,354,441
-----------------------------------------------------------------
Ending units 996,950 1,520,568 3,212,853 6,930,032
=================================================================
</TABLE>
See accompanying notes to financial statements.
32
<PAGE> 69
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
December 31, 1995
(Continued)
<TABLE>
<CAPTION>
High Yield Target '98 Fixed Income
Portfolio Portfolio Portfolio
--------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 4,363,597 $ 898,085 $ 1,625,809
Net realized gains (losses) from securities transactions (791,422) (27,404) (8,762)
Change in net unrealized appreciation/depreciation
of investments 3,692,568 963,083 2,470,405
--------------------------------------------
Increase in net assets from operations 7,264,743 1,833,764 4,087,452
--------------------------------------------
From capital transactions:
Net proceeds from units sold 1,174,201 297,407 613,947
Cost of units redeemed (13,333,212) (3,030,133) (4,970,144)
Net transfers 4,092,760 (5,298,145) 257,155
--------------------------------------------
Decrease in net assets from capital transactions (8,066,251) (8,030,871) (4,099,042)
--------------------------------------------
Increase (decrease) in net assets (801,508) (6,197,107) (11,590)
Net assets at beginning of period 44,717,058 17,023,117 25,627,697
--------------------------------------------
Net assets at end of period $ 43,915,550 $10,826,010 $25,616,107
============================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 60,439 16,756 26,177
Units redeemed (690,095) (171,335) (212,032)
Units transferred 228,146 (294,848) 9,283
--------------------------------------------
Decrease in units outstanding (401,510) (449,427) (176,572)
Beginning units 2,489,359 1,027,577 1,182,553
--------------------------------------------
Ending units 2,087,849 578,150 1,005,981
============================================
</TABLE>
<TABLE>
<CAPTION>
Government and Money
Quality Bond Market
Portfolio Portfolio TOTAL
---------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 6,643,191 $ 4,375,737 $ 67,578,566
Net realized gains (losses) from securities transactions 1,617,211 0 11,257,994
Change in net unrealized appreciation/depreciation
of investments 11,472,686 0 81,897,645
---------------------------------------------
Increase in net assets from operations 19,733,088 4,375,737 160,734,205
---------------------------------------------
From capital transactions:
Net proceeds from units sold 2,377,157 6,754,163 30,829,040
Cost of units redeemed (27,887,607) (49,189,095) (225,824,272)
Net transfers (28,500,021) 9,326,332 (3,625,409)
---------------------------------------------
Decrease in net assets from capital transactions (54,010,471) (33,108,600) (198,620,641)
---------------------------------------------
Increase (decrease) in net assets (34,277,383) (28,732,863) (37,886,436)
Net assets at beginning of period 141,664,975 117,922,221 928,303,471
---------------------------------------------
Net assets at end of period $107,387,592 $ 89,189,358 $890,417,035
=============================================
ANALYSIS OF INCREASE (DECREASE) IN UNITS
OUTSTANDING:
Units sold 97,915 412,340
Units redeemed (1,138,876) (2,998,004)
Units transferred (1,191,182) 581,465
------------------------------
Decrease in units outstanding (2,232,143) (2,004,199)
Beginning units 6,269,658 7,323,744
------------------------------
Ending units 4,037,515 5,319,545
==============================
</TABLE>
See accompanying notes to financial statements.
33
<PAGE> 70
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account One of Anchor National Life Insurance Company
(the "Separate Account") is a segregated investment account of Anchor
National Life Insurance Company (the "Company"). The Company is an
indirect, wholly owned subsidiary of SunAmerica Inc. The Separate
Account is registered as a segregated unit investment trust pursuant to
the provisions of the Investment Company Act of 1940, as amended.
The Separate Account is composed of twelve variable portfolios (the
"Variable Accounts"). Each of the Variable Accounts is invested solely
in the shares of a designated portfolio of the Anchor Series Trust (the
"Trust"). The Trust is a diversified, open-end, affiliated investment
company, which retains an investment advisor to assist in the
investment activities of the Trust. The contractholder may elect to
have payments allocated to a guaranteed-interest fund of the Company
(the "General Account"), which is not a part of the Separate Account.
The financial statements include balances allocated by the
contractholder to the twelve Variable Accounts and do not include
balances allocated to the General Account.
The investment objectives and policies of the twelve portfolios of the
Trust are summarized below:
The FOREIGN SECURITIES PORTFOLIO seeks long-term capital appreciation.
This portfolio invests primarily in a diversified group of equity
securities issued by foreign companies and primarily denominated in
foreign currencies.
The CAPITAL APPRECIATION PORTFOLIO seeks long-term capital
appreciation. This portfolio invests in growth equity securities which
are widely diversified by industry and company and may engage in
transactions involving stock index futures and options thereon as a
hedge against changes in market conditions.
The GROWTH PORTFOLIO seeks long-term capital appreciation. This
portfolio invests in growth equity securities and may engage in
transactions involving stock index futures and options thereon as a
hedge against changes in market conditions.
34
<PAGE> 71
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The NATURAL RESOURCES PORTFOLIO seeks a total return in excess of the
U.S. rate of inflation as represented by the Consumer Price Index. This
portfolio invests primarily in equity securities of U.S. or foreign
companies which are expected to provide favorable returns in periods of
rising inflation.
The GROWTH AND INCOME PORTFOLIO (formerly the Convertible Securities
Portfolio) seeks to provide high current income and long-term capital
appreciation. This portfolio invests primarily in securities that
provide the potential for growth and offer income, such as
dividend-paying stocks and securities convertible into common stock.
This portfolio may also engage in transactions involving stock index
futures and options thereon as a hedge against changes in market
conditions.
The STRATEGIC MULTI-ASSET PORTFOLIO seeks high long-term total
investment return. This portfolio invests in growth equity securities,
aggressive growth equity securities, investment grade bonds,
high-yield, high-risk bonds, international equity securities and money
market instruments. This portfolio may also engage in transactions
involving stock index futures contracts and options thereon, and
transactions involving the future delivery of fixed-income securities
("Financial Futures Contracts") and options thereon as a hedge against
changes in market conditions.
The MULTI-ASSET PORTFOLIO seeks long-term total investment return
consistent with moderate investment risk. This portfolio invests in
growth equity securities, convertible securities, investment grade
fixed-income securities and money market securities. This portfolio may
also engage in transactions involving stock index futures contracts and
options thereon, and Financial Futures Contracts and options thereon as
a hedge against changes in market conditions.
The HIGH YIELD PORTFOLIO seeks high current income. A secondary
investment objective is capital appreciation. This portfolio invests at
least 65% of its assets in high-yielding, high-risk, income-producing
corporate bonds, which generally carry ratings lower than those
assigned to investment grade bonds by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P"), or which are
unrated. This portfolio may also engage in transactions involving
Financial Futures Contracts and options thereon as a hedge against
changes in market conditions.
35
<PAGE> 72
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The TARGET '98 PORTFOLIO seeks a predictable compounded investment
return for the specified time period, consistent with preservation of
capital. This portfolio invests primarily in zero coupon securities and
current, interest-bearing, investment grade debt obligations which are
issued by the U.S. Government, its agencies and instrumentalities, and
both domestic and foreign corporations.
The FIXED INCOME PORTFOLIO seeks a high level of current income
consistent with preservation of capital. This portfolio invests
primarily in investment grade, fixed-income securities and may engage
in Financial Futures Contracts and options thereon as a hedge against
changes in market conditions.
The GOVERNMENT AND QUALITY BOND PORTFOLIO seeks relatively high current
income, liquidity and security of principal. This portfolio invests in
obligations issued, guaranteed or insured by the U.S. Government, its
agencies or instrumentalities and in corporate debt securities rated Aa
or better by Moody's or AA or better by S&P.
The MONEY MARKET PORTFOLIO seeks current income consistent with
stability of principal through investment in a diversified portfolio of
money market instruments maturing in 397 days or less. The portfolio
will maintain a dollar-weighted average portfolio maturity of not more
than 90 days.
Purchases and sales of shares of the portfolios of the Trust are valued
at the net asset values of the shares on the date the shares are
purchased or sold. Dividends and capital gains distributions are
recorded when received. Realized gains and losses on the sale of
investments in the Trust are recognized at the date of sale and are
determined on an average cost basis.
Accumulation unit values are computed daily based on the total net
assets of the Variable Accounts.
36
<PAGE> 73
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS
Charges and deductions are applied against the current value of the
Separate Account and are paid as follows:
WITHDRAWAL CHARGE: The contract value may be withdrawn at any time
during the accumulation period. There is a free withdrawal amount for
the first withdrawal during a contract year after the first contract
year. The free withdrawal amount is equal to 10% of aggregate purchase
payments that remain subject to the withdrawal charge and that have not
previously been withdrawn. Should a withdrawal exceed the free
withdrawal amount, a withdrawal charge, in certain circumstances, is
imposed and paid to the Company.
Withdrawal charges vary in amount depending upon the contribution year
in which the purchase payment being withdrawn was made. The withdrawal
charge is deducted from the remaining contract value so that the actual
reduction in contract value as a result of the withdrawal will be
greater than the withdrawal amount requested and paid. For purposes of
determining the withdrawal charge, withdrawals will be allocated to
purchase payments on a first-in, first-out basis so that all
withdrawals are allocated to purchase payments to which the lowest (if
any) withdrawal charge applies.
Any amount withdrawn which exceeds a free withdrawal may be subject to
a withdrawal charge in accordance with the withdrawal charge table
shown below:
<TABLE>
<CAPTION>
Contribution Applicable Withdrawal
Year Charge Percentage
------------ ---------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth and later 0%
</TABLE>
37
<PAGE> 74
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS (continued)
ANNUITY CHARGE: Contractholders may elect a lump sum payment or one of
three annuity options. Option 1 provides a life income with
installments guaranteed, Option 2 provides a joint and survivor
annuity, and Option 3 provides income for a specified period. No
annuity charge is assessed if Option 1 or Option 2 is elected. If a
contractholder elects Option 3, an annuity charge equal to the
withdrawal charge if the contract were surrendered may be applied. No
annuity charge will be assessed if Option 3 is elected by a beneficiary
under the death benefit.
RECORDS MAINTENANCE CHARGE: An annual records maintenance charge of $30
is charged against each contract, which reimburses the Company for
expenses incurred in establishing and maintaining records relating to a
contract. For contracts issued prior to September 1, 1987, the records
maintenance charge will be assessed on December 31 of each calendar
year. The charge will be waived on contracts for which the contract
value is totally surrendered during the year. For contracts issued on
or after September 1, 1987, the records maintenance charge will be
assessed on each anniversary of the issue date of the contract. In the
event that a total surrender of contract value is made, the charge will
be assessed as of the date of surrender without proration.
TRANSFER FEE: A transfer fee of $25 ($10 in Pennsylvania and Texas) is
assessed on each transfer of funds in excess of fifteen transactions
within a contract year or if a transfer is made within 30 days of the
issue date of the contract.
PREMIUM TAXES: Premium taxes or other taxes payable to a state or other
governmental entity will be charged against the contract values. Some
states assess premium taxes at the time purchase payments are made;
others assess premium taxes at the time annuity payments begin. The
Company currently intends to deduct premium taxes at the time of
surrender, upon death of the contractholder or upon annuitization;
however, it reserves the right to deduct any premium taxes when
incurred. Premium taxes generally range from 0% to 3.5%.
38
<PAGE> 75
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS (continued)
MORTALITY AND EXPENSE RISK CHARGE: The Company deducts mortality and
expense risk charges, which total to an annual rate of 1.25% of the net
asset value of each portfolio, computed on a daily basis. The mortality
risk charge is compensation for the mortality risks assumed by the
Company from its contractual obligations to make annuity payments after
the contract has annuitized for the life of the annuitant, to waive the
withdrawal charge in the event of the death of the annuitant and to
provide a death benefit if the annuitant dies prior to the date annuity
payments begin. The expense risk charge is compensation for the risk
assumed by the Company that the cost of administering the contracts
will exceed the amount received from the records maintenance charge and
the administrative expense charge. Both of these charges are guaranteed
by the Company and cannot be increased.
ADMINISTRATIVE EXPENSE CHARGE: The Company deducts an administrative
expense charge at an annual rate of 0.15% of the net asset value of
each portfolio, computed on a daily basis. The administrative expense
charge is designed to cover those expenses which exceed the revenues
from the records maintenance charge.
SEPARATE ACCOUNT INCOME TAXES: The Company currently does not maintain
a provision for taxes, but has reserved the right to establish such a
provision for taxes in the future if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of
the Separate Account.
39
<PAGE> 76
VARIABLE ANNUITY ACCOUNT ONE
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT IN ANCHOR SERIES TRUST
The aggregate cost of the Trust's shares acquired and the aggregate
proceeds from shares sold during the year ended December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
Cost of Shares Proceeds from
Variable Accounts Acquired Shares Sold
----------------- -------------- -------------
<S> <C> <C>
Foreign Securities Portfolio $ 15,277,042 $ 24,250,291
Capital Appreciation Portfolio 66,344,236 74,786,914
Growth Portfolio 33,070,501 57,272,196
Natural Resources Portfolio 6,297,369 10,084,149
Growth and Income Portfolio 5,333,867 7,515,404
Strategic Multi-Asset Portfolio 6,470,493 14,319,044
Multi-Asset Portfolio 13,266,506 30,771,722
High Yield Portfolio 24,399,248 25,265,738
Target '98 Portfolio 1,630,880 2,868,095
Fixed Income Portfolio 2,726,417 5,822,221
Government and Quality Bond
Portfolio 31,609,950 43,176,758
Money Market Portfolio 103,763,060 121,952,424
============ ============
</TABLE>
4. FEDERAL INCOME TAXES
The Company qualifies for federal income tax treatment granted to life
insurance companies under subchapter L of the Internal Revenue Service
Code ("the Code"). The operations of the Separate Account are part of
the total operations of the Company and are not taxed separately. The
Separate Account is not treated as a regulated investment company under
the Code.
40
<PAGE> 77
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following financial statements are included in Part A of the
Registration Statement:
None
The following financial statements are included in Part B of the
Registration Statement:
Consolidated Financial Statements of Anchor National Life
Insurance Company for the fiscal year ended
September 30, 1997
Financial Statements of Variable Annuity Account One for the
fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
(b) Exhibits
- ----------------
<S> <C> <C>
(1) Resolutions Establishing Separate Account...... Filed Herewith
(2) Custody Agreements............................. Not Applicable
(3) (a) Distribution Contract..................... Filed Herewith
(b) Form of Selling Agreement................. Filed Herewith
(4) Variable Annuity Contract................. Filed Herewith
(5) Application for Contract....................... Filed Herewith
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation.............. Filed Herewith
(b) By-Laws................................... Filed Herewith
(7) Reinsurance Contract........................... Not Applicable
(8) Form of Fund Participation Agreement........... Filed Herewith
(9) Opinion of Counsel............................. Filed Herewith
Consent of Counsel............................. Filed Herewith
(10) Consent of Independent Accountants............. Filed Herewith
(11) Financial Statements Omitted from Item 23...... None
(12) Initial Capitalization Agreement............... Not Applicable
(13) Performance Computations....................... Not Applicable
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Control with Anchor National Life Insurance
Company, the Depositor of Registrant........... Filed Herewith
(15) Powers of Attorney............................. Filed Herewith
(27) Financial Data Schedules....................... Not Applicable
</TABLE>
Item 25. Directors and Officers of the Depositor
The officers and directors of Anchor National Life Insurance Company
are listed below. Their principal business address is 1 SunAmerica Center, Los
Angeles, California 90067-6022, unless otherwise noted.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Eli Broad Chairman, President and
Chief Executive Officer
Jay S. Wintrob Director and Executive Vice President
Peter McMillan Director
Jana W. Greer Director and Senior Vice President
James R. Belardi Director and Senior Vice President
Lorin M. Fife Director, Senior Vice President,
General Counsel and Assistant
Secretary
Susan L. Harris Director, Senior Vice President
and Secretary
Scott L. Robinson Director and Senior Vice President
</TABLE>
<PAGE> 78
<TABLE>
<S> <C>
James W. Rowan Director and Senior Vice President
N. Scott Gillis Senior Vice President and Controller
Edwin R. Reoliquio Senior Vice President and Chief Actuary
Victor E. Akin Senior Vice President
Scott H. Richland Vice President and Treasurer
J. Franklin Grey Vice President
Keith B. Jones Vice President
Michael Lindquist Vice President
Edward P. Nolan* Vice President
Greg Outcalt Vice President
</TABLE>
- ------------------
* 88 Bradley Road, P.O. Box 4005, Woodbridge, Connecticut 06525
Item 26. Persons Controlled By or Under Common Control With Depositor or
Registrant
The Registrant is a separate account of Anchor National Life Insurance
Company (Depositor). For a complete listing and diagram of all persons directly
or indirectly controlled by or under common control with the Depositor or
Registrant, see Exhibit 14 which is incorporated herein by reference.
Item 27. Number of Contract Owners
As of December 31, 1997, the number of Contracts funded by Variable
Annuity Account One was 36,527 of which 24,563 were Qualified Contracts and
11,964 were Non-Qualified Contracts.
Item 28. Indemnification
None.
Item 29. Principal Underwriter
SunAmerica Capital Services, Inc. serves as distributor to the
Registrant.
Its principal business address is 733 Third Avenue, 4th Floor, New
York, New York 10017. The following are the directors and officers of SunAmerica
Capital Services, Inc.
<TABLE>
<CAPTION>
Name Position with Distributor
---- ------------------------
<S> <C>
J. Steven Neamtz Director and President
Robert M. Zakem Director, Executive Vice
President and Assistant
Secretary
Peter Harbeck Director
Gary W. Krat Director
Enrique Lopez-Balboa Vice President
Steven Rothstein Treasurer
Susan L. Harris Secretary
Lorin M. Fife Assistant Secretary
</TABLE>
<TABLE>
<CAPTION>
Net
Distribution Compensation
Name of Discounts and on Redemption Brokerage
Distributor Commissions Annuitization Commission Commissions*
- ------------ -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
SunAmerica None None None None
Capital
Services, Inc.
</TABLE>
- ------------------
<PAGE> 79
* The distribution fee is paid by Anchor National Life Insurance Company.
Item 30. Location of Accounts and Records
Anchor National Life Insurance Company, the Depositor for the
Registrant, is located at 1 SunAmerica Center, Los Angeles, California 90067-
6022. SunAmerica Capital Services, Inc., the distributor of the Contracts, is
located at 733 Third Avenue, 4th Floor, New York, New York 10017. Each maintains
those accounts and records required to be maintained by it pursuant to Section
31(a) of the Investment Company Act and the rules promulgated thereunder.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02100, maintains certain accounts and records pursuant to the
instructions of the Registrant.
Item 31. Management Services
Not Applicable.
<PAGE> 80
Item 32. Undertakings
Registrant undertakes to (1) file post-effective amendments to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity Contracts may be
accepted; (2) include either (A) as part of any application to purchase a
Contract offered by the prospectus forming a part of the Registration Statement,
a space that an applicant can check to request a Statement of Additional
Information, or (B) 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; and (3) deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request.
Further, Registrant undertakes to deduct mortality and expense risk
charges, distribution expense charges, withdrawal charges (contingent deferred
sales charges), contract maintenance fees and transfer fees that are in the
aggregate (1) reasonable in relation to the risks assumed by the Company and (2)
reasonable in amount as compared with other variable annuity products. Those
determinations are based on the Company's analysis of publicly available
information about similar industry practices, and by taking into consideration
factors such as current charge levels and benefits provided, the existence of
expense charge guarantees and guaranteed annuity rates.
Item 33. Representation
The Company hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) other
investment alternatives available under the employer's Section 403(b)
arrangement to which the participant may elect to transfer his contract
value.
<PAGE> 81
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 for effectiveness of this Registration Statement and
has caused this Post-Effective Amendment to the Registration Statement to be
signed on its behalf, in the City of Los Angeles, and the State of California,
on this 29th day of January, 1998.
VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
---------------------------------------------
Jay S. Wintrob
Executive Vice President
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor, on behalf of itself and Registrant)
By: /s/ JAY S. WINTROB
----------------------------------------------
Jay S. Wintrob
Executive Vice President
As required by the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
ELI BROAD* President, Chief
- -------------------- Executive Officer and
Eli Broad Chairman of the Board
(Principal Executive
Officer)
SCOTT L. ROBINSON* Senior Vice President
- -------------------- and Director
Scott L. Robinson (Principal Financial
Officer)
SCOTT GILLIS* Senior Vice President
- -------------------- and Controller
N. Scott Gillis (Principal Accounting
Officer)
JAMES R. BELARDI* Director
- --------------------
James R. Belardi
LORIN M. FIFE* Director
- --------------------
Lorin M. Fife
JANA W. GREER* Director
- --------------------
Jana W. Greer
</TABLE>
<PAGE> 82
<TABLE>
<S> <C> <C>
/s/ SUSAN L. HARRIS Director January 29, 1998
- --------------------
Susan L. Harris
PETER MCMILLAN* Director
- --------------------
Peter McMillan
JAY S. WINTROB* Director
- --------------------
Jay S. Wintrob
JAMES W. ROWAN* Director
- --------------------
James W. Rowan
* By: /s/ SUSAN L. HARRIS Attorney-in-Fact
--------------------
Susan L. Harris
</TABLE>
Date: January 29, 1998
<PAGE> 83
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(1) Resolution Establishing Separate Account
(3)(a) Distribution Agreement
(3)(b) Selling Agreement
(4) Variable Annuity Contract
(5) Application for Contract
(6)(a) Certificate of Incorporation
(6)(b) By-Laws
(8) Fund Participation Agreement
(9) Opinion/Consent of Counsel
(10) Consent of Independent Accountants
(14) Diagram and Listing of All Persons Directly or
Indirectly Controlled By or Under Common Control
With Anchor National Life Insurance Company, the
Depositor of Registrant
(15) Powers of Attorney
</TABLE>
<PAGE> 1
EXHIBIT 1
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSENT OF THE EXECUTIVE COMMITTEE
OF THE BOARD OF DIRECTORS
TO CORPORATE ACTION WITHOUT A MEETING
The undersigned Directors of ANCHOR NATIONAL LIFE INSURANCE
COMPANY, a California corporation (this "Corporation"), constituting the entire
Executive Committee of the Board of Directors of this Corporation and acting in
accordance with the Bylaws of this Corporation, do hereby unanimously consent to
the adoption of the following resolutions and the corporate actions contemplated
thereby, effective as of this 30th day of November, 1989.
WHEREAS, this Corporation and Integrated Life Insurance
Company ("I.R. Life") have entered into an Assumption Reinsurance
Agreement ("Reinsurance Agreement") pursuant to which all of the
annuity contracts, the variable portion of which is funded in the ICAP
Variable Annuity Account One of I.R. Life ("I.R. ICAP Account"), are to
be assumptively reinsured by this Corporation; and
WHEREAS, such Reinsurance Agreement specifies that all I.R.
ICAP Account assets funding the contracts are to be transferred,
intact, to this Corporation.; and
WHEREAS, this Corporation has agreed to assume all
contractural obligations under the contracts funded in the I.R. ICAP
Account and to accept the assets of the I.R. ICAP Account relating
thereto;
NOW, THEREFORE, BE IT RESOLVED, that the officers of this
Corporation be, and they hereby are, authorized to establish for the
accounts of this Corporation the Variable Annuity Account One
("Separate Account") in accordance with the insurance laws of the State
of California, to provide the investment medium for contracts
assumptively reinsured or to be issued by this Corporation
("Contracts") as may be designated as participating therein. The
Separate Account shall receive, hold, invest and reinvest only the
monies arising from: (1) the transfer of the I.R. ICAP Account assets
from I.R. Life pursuant to the Reinsurance agreement; (2) premiums,
contributions or payments made pursuant to Contracts participating
therein; (3) such assets of this Corporation as may be deemed necessary
for the
<PAGE> 2
orderly operation of such Separate Account; and (4) the dividends,
interest and gains produced by the foregoing; and
RESOLVED FURTHER, that the Separate Account shall be divided
into various sub-accounts as determined necessary by the officers of
this Corporation to fund the Contracts. Purchase payments (net of any
applicable deductions) remitted to this Corporation under the Contracts
and allocated to the Separate Account shall be allocated to the
appropriate sub-account in accordance with the terms of the Contracts.
Each sub-account, in turn, shall invest in the shares of the series
type registered management investment company which now acts as the
underlying investment medium for I.R. ICAP Account (or one or more
registered management investment companies, or designated investment
series thereof as may be established in the future), as specified for
investment by it, at net asset value per share next to be determined
following receipt of an order for purchase by such sub-account. To the
extent that such registered management investment company, or
companies, establishe additional investment series, the officers of
this Corporation are empowered and authorized to establish such
additional sub-accounts as there are additional investment series, with
each such sub-account to invest solely in the shares of a specified
additional investment series; and
RESOLVED FURTHER, that the Separate Account shall be
administered and accounted for as part of the general business of this
Corporation, but the income, gains and losses of the Separate Account
shall be credited to or charged solely against the assets held in the
Separate Account, without regard to any other income arising out of
other business that this Corporation may conduct. The assets of such
Separate Account shall not be chargeable with the liabilities arising
out of any other business that this Corporation may conduct; and
RESOLVED FURTHER, that each sub-account shall be administered
and accounted for as part of the general business of this Corporation,
but the income (including capital gains, or losses, if any) of each
sub-account shall be credited to or charged against the assets held in
that sub-account in accordance with the terms of the Contracts funded
therein, without regard to other income of the remaining sub-accounts
or arising out of any other business that this Corporation may conduct.
The assets of each sub-account shall not be chargeable with liabilities
arising out of the business conducted by another sub-account, nor shall
a sub-account be chargeable with liabilities arising out of any other
business that this Corporation may conduct; and
RESOLVED FURTHER, that the officers of this Corporation be ,
and they hereby are, authorized:
<PAGE> 3
(i) to take whatever actions are necessary to see to
it that the Contracts are registered under the provisions of
the Securities Act of 1933 to the extent that they shall
determine that such registration is necessary;
(ii) to take whatever actions are necessary to assure
that such Separate Account is properly registered with the
Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940:
(iii) to prepare, execute and file such amendments to
any registration statements filed under the aforementioned
Acts (including such pre-effective and post-effective
amendments), supplements and exhibits thereto as they may deem
necessary or desirable;
(iv) to apply for exemption from those provisions of
the aforementioned Acts and the rules promulgated thereunder
as they may deem necessary or desirable and to take any and
all other actions which they may deem necessary, desirable or
appropriate in connection with such Acts;
(v) to take whatever actions are necessary to assure
that the Contracts are filed with the appropriate state
insurance regulatory authorities and to prepare and execute
all necessary documents to obtain approval of the insurance
regulatory authorities;
(vi) to prepare or have prepared and executed all
necessary documents to obtain approval of, or clearance with,
or other appropriate actions required by, any other regulatory
authority that may be necessary in connection with the
foregoing matters;
(vii) to enter into agreements with appropriate
entities for the provision of administrative and other
required services on behalf of the Separate Account and for
the safekeeping of assets of such Separate Account; and
RESOLVED FURTHER, that the form of any resolutions required by
any state authority to be filed in connection with any of the documents
or instruments referred to in any of the preceding resolutions be, and
the same hereby are, adopted as fully set forth herein if (i) in the
opinion of the officers of this Corporation the adoption of the
resolutions is advisable; and (ii) the Corporate Secretary or Assistant
Secretary of this Corporation evidences such adoption by inserting into
these minutes copies of such resolutions, and
RESOLVED FURTHER, that the officers of this Corporation, and
each of them are hereby authorized to prepare and to execute the
necessary documents and to take such further actions as may be deemed
necessary or appropriate, in their direction, to implement the purpose
of the foregoing resolutions.
<PAGE> 4
IN WITNESS WHEREOF the undersigned have executed this instrument as
of the date first above written.
/s/ Eli Broad
---------------------------
Eli Broad
/s/ Norman J. Metcalfe
---------------------------
Norman J. Metcalfe
/s/ Robert P. Saltzman
---------------------------
Robert P. Saltzman
<PAGE> 1
EXHIBIT 3A
DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into as of this 28th day of January, 1994, by
and between ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Anchor"), a life insurance
company organized under the laws of the State of California, on behalf of itself
and VARIABLE ANNUITY ACCOUNT ONE ("Separate Account") , a Separate Account
established by Anchor pursuant to the insurance laws of the State of California,
and SUNAMERICA CAPITAL SERVICES, INC., ("Distributor"), a corporation organized
under the laws of the state of Delaware.
WITNESSETH:
WHEREAS, Anchor issues to the public certain variable annuity contracts
identified on the contract specification sheet attached hereto as Attachment A
("Contracts") , which Contracts are currently distributed by SunAmerica
Securities, Inc. and Royal Alliance Associates, Inc.; and
WHEREAS, Anchor, by resolution adopted on January 17, 1990, established
the Separate Account on its books of account, for the purpose of issuing
variable annuity contracts; and
WHEREAS, the Separate Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 (File No. 811-4296); and
WHEREAS, the Contracts to be issued by Anchor are registered with the
Commission under the Securities Act of 1933 (the "Act") (File No. 33-32569) for
offer and sale to the public, and otherwise are in compliance with all
applicable laws; and
WHEREAS, the Distributor, a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc., proposes to act as distributor on an agency basis in
the marketing and distribution of said Contracts; and
WHEREAS, Anchor desires to obtain the services of the Distributor as
distributor of said Contracts issued by Anchor through the Separate Account to
replace SunAmerica Securities, Inc. and Royal Alliance Associates, Inc.;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, Anchor, the Separate Account, and Distributor hereby agree as
follows:
<PAGE> 2
1. The Distributor will serve as distributor on an agency basis
for the Contracts which will be issued by Anchor through the Separate
Account.
2. The Distributor will, either directly or through an affiliate,
provide information and marketing assistance to licensed insurance
agents and broker-dealers on a continuing basis. The Distributor shall
be responsible for compliance with the requirements of state
broker-dealer regulations and the Securities Exchange Act of 1934 as
each applies to Distributor in connection with its duties as
distributor of said Contracts. Moreover,, the Distributor shall conduct
its affairs in accordance with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
3. Subject to the agreement of Anchor, the Distributor may enter
into dealer agreements with broker-dealers registered under the
Securities Exchange Act of 1934 and authorized by applicable law to
sell variable annuity contracts issued by Anchor through the Separate
Account. Any such contractual arrangement is expressly made subject to
this Agreement, and the Distributor will at all times be responsible to
Anchor for purposes of the federal securities laws for the distribution
of Contracts issued through the Separate Account. The Distributor
expressly assumes any dealer agreements entered into by SunAmerica
Securities, Inc. and Royal Alliance Associates, Inc. with respect to
the Contracts.
4. Warranties
(a) Anchor represents and warrants to the Distributor
that:
(i) Registration Statements on Form N-4 for each
of the Contracts identified on Attachment A have been
filed with the Commission in the form previously
delivered to the Distributor and that copies of any
and all amendments thereto will be forwarded to the
Distributor at the time that they are filed with the
Commission;
(ii) The Registration Statement and any further
amendments or supplements thereto will, when they
become effective, conform in all material respects to
the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, and the rules and
regulations of the Commission under such Acts, and
will not contain an untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading; provided,
- 2 -
<PAGE> 3
however, that this representation and warranty shall
not apply to any statement or omission made in
reliance upon and in conformity with information
furnished in writing to Anchor by the Distributor
expressly for use therein;
(iii) Anchor is validly existing as a stock life
insurance company in good standing under the laws of
the State of California, with power (corporate or
other) to own its properties and conduct its business
as described in the Prospectus, and has been duly
qualified for the transaction of business and is in
good standing under the laws of each other
jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such
qualification;
(iv) The Contracts to be issued through the
Separate Account and offered for sale by the
Distributor on behalf of Anchor hereunder have been
duly and validly authorized and, when issued and
delivered against payment therefor as provided
herein, will be duly and validly issued and will
conform to the description of such Contracts
contained in the Prospectuses relating thereto;
(v) Those persons who offer and sell the
Contracts are to be appropriately licensed in a
manner as to comply with the state insurance laws;
(vi) The performance of this Agreement and the
consummation of the transactions contemplated by this
Agreement will not result in a breach or violation of
any of the terms or provisions of, or constitute a
default under any statute, any indenture, mortgage,
deed of trust, note agreement or other agreement or
instrument to which Anchor is a party or by which
Anchor is bound, Anchor's Charter as a stock life
insurance company or Bylaws, or any order, rule or
regulation of any court or governmental agency or
body having jurisdiction over Anchor or any of its
properties; and no consent, approval, authorization
or order of any court or governmental agency or body
is required for the consummation by Anchor of the
transactions contemplated by this Agreement, except
such as may be required under the Securities Exchange
Act of 1934 or state insurance or securities laws in
connection with the distribution of the Contracts by
the Distributor; and
- 3 -
<PAGE> 4
(vii) There are no material legal or governmental
proceedings pending to which Anchor or the Separate
Account is a party or of which any property of Anchor
or the Separate Account is the subject, other than as
set forth in the Prospectus relating to the
Contracts, and other than litigation incident to the
kind of business conducted by Anchor, if determined
adversely to Anchor, would individually or in the
aggregate have a material adverse effect on the
financial position, surplus or operations of Anchor.
(b) The Distributor represents and warrants to Anchor
that:
(i) It is a broker-dealer duly registered with
the Commission pursuant to the Securities Exchange
Act of 1934 and a member in good standing of the
National Association of Securities Dealers, Inc., and
is in compliance with the securities laws in those
states in which it conducts business as a
broker-dealer;
(ii) The performance of this Agreement and the
consummation of the transactions herein contemplated
will not result in a breach or violation of any of
the terms or provisions of or constitute a default
under any statute, any indenture, mortgage, deed of
trust, note agreement or other agreement or
instrument to which the Distributor is a party or by
which the Distributor is bound, the Certificate of
Incorporation or Bylaws of the Distributor, or any
order, rule or regulation of any court or
governmental agency or body having jurisdiction over
the Distributor or its property; and
(iii) To the extent that any statements or
omissions made in the Registration Statement, or any
amendment or supplement thereto are made in reliance
upon and in conformity with written information
furnished to Anchor by the Distributor expressly for
use therein, such Registration Statement and any
amendments or supplements thereto will, when they
become effective or are filed with the Commission, as
the case may be, conform in all material respects to
the requirements of the Securities Act of 1933 and
the rules and regulations of the Commission
thereunder and will not contain any untrue statement
of a material fact or omit to state any material fact
- 4 -
<PAGE> 5
required to be stated therein or necessary to make
the statements therein not misleading.
5. The Distributor, or an affiliate thereof, shall keep, or shall
cause to be kept, in a manner and form prescribed or approved by Anchor
and in accordance with Rules 17a-3 and 17a-4 under the Securities
Exchange Act of 1934, correct records and books of account as required
to be maintained by a registered broker-dealer, acting as distributor,
of all transactions entered into on behalf of Anchor and with respect
to its activities under this Agreement for Anchor. The party
maintaining the books and records required hereunder shall make such
records and books of account available for inspection by the
Commission, and Anchor shall have the right to inspect, make copies of
or take possession of such records and books of account at any time on
demand.
6. Subsequent to having been authorized to commence the
activities contemplated herein, the Distributor, or an affiliate
thereof, will cause the currently effective Prospectus relating to the
subject Contracts in connection with its marketing and distribution
efforts to be utilized. As to the other types of sales material, the
Distributor, or an affiliate thereof, agrees that it will cause to be
used only sales materials as have been authorized for use by Anchor and
which conform to the requirements of federal and state laws and
regulations, and which have been filed where necessary with the
appropriate regulatory authorities, including the National Association
of Securities Dealers, Inc.
7. The Distributor, or such other person as referred to in
paragraph 6 above, will not distribute any Prospectus, sales
literature, or any other printed matter or material in the marketing
and distribution of any Contract if, to the knowledge of the
Distributor, or such other person, any of the foregoing misstates the
duties, obligation or liabilities of Anchor or the Distributor.
8. Expenses of providing sales presentations, mailings,
advertising and any other marketing efforts conducted in connection
with the distribution or sale of the Contracts shall be borne by
Anchor.
9. The Distributor, as distributor of the Contracts, shall not be
entitled to remuneration for its services.
10. All premium payments collected on the sale of the Contracts by
the Distributor, if any, shall be transmitted to Anchor for immediate
allocation to the Separate Account in accordance with the directions
furnished by the purchasers of such Contracts at the time of purchase.
- 5 -
<PAGE> 6
11. The Distributor makes no representations or warranties
regarding the number of Contracts to be sold by licensed broker-dealers
and insurance agents or the amount to be paid thereunder. The
Distributor does, however, represent that it will actively engage in
its duties under this Agreement on a continuous basis while there is an
effective registration statement with the Commission.
12. It is understood and agreed that the Distributor may render
similar services or act as a distributor or dealer in the distribution
of other variable contracts.
13. Anchor will use its best efforts to assure that the Contracts
are continuously registered under the Securities Act of 1933 and,
should it ever be required, under state Blue Sky Laws and to file for
approval under state insurance laws when necessary.
14. Anchor reserves the right at any time to suspend or limit the
public offering of the subject Contracts.
15. Anchor agrees to advise the Distributor immediately of:
(a) any request by the commission (i) for amendment of
the Registration Statement relating to the Contracts, or (ii)
for additional information;
(b) the issuance by the commission of any stop order
suspending the effectiveness of the Registration Statement
relating to the Contracts or the initiation of any proceedings
for that purpose; and
(c) the happening of any material event, if known, which
makes untrue any statement made in the Registration Statement
relating to the Contracts or which requires the making of a
change therein in order to make any statement made therein not
misleading.
16. Anchor will furnish to the Distributor such information with
respect to the Separate Account and the Contracts in such form and
signed by such of its officers as the Distributor may reasonably
request; and will warrant that the statements therein contained when so
signed will be true and correct.
17. Each of the undersigned parties agrees to notify the other in
writing upon being apprised of the institution of any proceeding,
investigation or hearing involving the offer or sale of the subject
Contracts.
18. This Agreement will terminate automatically upon its
assignment to any person other than a person which is a
- 6 -
<PAGE> 7
wholly owned subsidiary of SunAmerica Inc. This Agreement shall
terminate, without the payment of any penalty by either party:
(a) at the option of Anchor, upon sixty days' advance
written notice to the Distributor; or
(b) at the option of the Distributor upon 90 days'
written notice to Anchor; or
(c) at the option of Anchor upon institution of formal
proceedings against the Distributors by the National
Association of Securities Dealers, Inc. or by the Commission;
or
(d) at the option of either party, if the other party or
any representative thereof at any time (i) employs any device,
scheme, or artifice to defraud; makes any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements made, in light of the
circumstances under which they were made, not misleading; or
engages in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any
person; or (ii) violates the conditions of this Agreement.
19. Each notice required by this Agreement may be given by
telephone or telefax and confirmed in writing.
20. (a) Anchor will indemnify and hold harmless the Distributor
and each person, if any, who controls the Distributor within the
meaning of the Act against any losses, claims, damages or liabilities
to which the Distributor or such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, Prospectus or Statement
of Additional Information or any other written sales material prepared
by Anchor which is utilized by the Distributor in connection with the
sale of Contracts or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement, Prospectus and
Statement of Additional Information) necessary to make the statement
therein not misleading or (in the case of such other sales material)
necessary to make the statement therein not misleading or (in the case
of such other sales material) necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made and will reimburse the Distributor and each such controlling
- 7 -
<PAGE> 8
person for any legal or other expenses reasonably incurred by the
Distributor or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action,
provided, however, that Anchor will not be liable in any such case to
the extent that any such loss, claim, or omission or alleged omission
made in such Registration Statement, Prospectus or Statement of
Additional Information in conformity with information furnished to
Anchor specifically for use therein; and provided, further, that
nothing herein shall be so construed as to protect the Distributor
against any liability to Anchor or the Contract Owners to which the
Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence, in the performance of its
duties, or by reason of the reckless disregard by the Distributor of
its obligations and duties under this Agreement.
(b) The Distributor will likewise indemnify and hold
harmless Anchor, each of its directors and officers and each
person, if any, who controls the Trust within the meaning of
the Act to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in conformity with written
information furnished to the Trust by the Distributor
specifically for use therein.
21. This Agreement shall be subject to the laws of the State of
California and construed so as to interpret the Contracts and insurance
contracts written within the business operation of Anchor.
22. This Agreement covers and includes all agreements, verbal and
written, between Anchor and the Distributor with regard to the
marketing and distribution of the Contracts, and supersedes and annuls
any and all agreements between the parties with regard to the
distribution of the Contracts; except that this Agreement shall not
affect the operation of previous or future agreements entered into
between Anchor and the Distributor unrelated to the sale of the
Contracts.
- 8 -
<PAGE> 9
THIS AGREEMENT, along with any Attachment attached hereto and
incorporated herein by reference, may be amended from time to time by the mutual
agreement and consent of the undersigned parties; provided that such amendment
shall not affect the rights of existing Contract Owners, and that such amendment
be in writing and duly executed.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto affixed
and attested on the date first stated above.
ANCHOR NATIONAL LIFE
INSURANCE COMPANY
/s/ JAY S. WINTROB
By:----------------------------------
Jay S. Wintrob
Executive Vice President
VARIABLE ANNUITY ACCOUNT ONE
By: ANCHOR NATIONAL LIFE
INSURANCE COMPANY
/s/ JAY S. WINTROB
By:----------------------------------
Jay S. Wintrob
Executive Vice President
SUNAMERICA CAPITAL SERVICES, INC.
/s/ PETER HARBECK
By:----------------------------------
PETER HARBECK
Executive Vice President
- 9 -
<PAGE> 10
Attachment A
CONTRACT SPECIFICATION SHEET
The following variable annuity contracts are the subject of the Distribution
Agreement between Anchor National Life Insurance Company and SunAmerica Capital
services, Inc. dated January 28, 1994 regarding the sale of the following
contracts funded in Variable Annuity Account One:
1. ICAP II
<PAGE> 1
EXHIBIT 3B
ANCHOR NATIONAL LIFE INSURANCE COMPANY
1 SunAmerica Center
Los Angeles, CA 90067-6022
Mailing Address:
P. O. Box 54299
Los Angeles, CA 90054-0299
- --------------------------------------------------------------------------------
SELLING
AGREEMENT
<PAGE> 2
SELLING AGREEMENT
This SELLING AGREEMENT ("Agreement"), dated _____________________, is by and
among ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Insurer"), SUNAMERICA CAPITAL
SERVICES, INC. ("Distributor") and ___________________________________________,
together with its duly licensed insurance affiliates indicated on the attached
Annex I (the "Affiliates" and collectively, "Broker/Dealer").
Where permitted by state law, Broker/Dealer is acting as general agent hereunder
and shall be responsible for the duties of broker/dealer and general agent
hereunder. If state law does not permit Broker/Dealer to hold a corporate
insurance license, the appropriate duly licensed insurance affiliate identified
on Annex I shall act as general agent hereunder. Upon execution of Annex I, such
entity or entities agree to be bound by the terms hereof as if it were included
in the definition of Broker/Dealer.
1. Appointment. This Agreement is for the purpose of arranging for the
distribution of certain variable and fixed annuity contracts and any
other life insurance products identified on Exhibit 1 (the
"Contracts"), issued by the Insurer and, in the case of variable
contracts, for which Distributor is distributor, through sales people
who are licensed agents of the Insurer for insurance purposes, are
associated with and registered representatives of Broker/Dealer (each,
a "Subagent"). In consideration of the mutual promises and covenants
contained in this Agreement, the Insurer and Distributor each appoint
Broker/Dealer and, as provided in Section 3, its Subagents, to solicit
and procure applications for the Contracts. This appointment is not
deemed to be exclusive in any manner and only extends to those
jurisdictions where the Contracts have been approved for sale and in
which Insurer and Broker/Dealer are both licensed as required by
prevailing regulatory requirements.
2. Representations and Warranties.
A. Each party hereto represents and warrants to each other party,
as follows:
(i) It is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or
other corresponding applicable law and has all requisite
power, corporate or otherwise to carry on its business as now
being conducted and to perform its obligations as contemplated
by this Agreement.
(ii) It has all licenses, approvals, permits and
authorizations of, and registrations with, all authorities and
agencies, including non-governmental self-regulatory agencies,
required under all federal, state, and local laws and
regulations to enable it to perform its oligations as
contemplated by this Agreement.
(iii) The execution, delivery and performance of this
Agreement have been duly and validly authorized by all
necessary corporate action, if applicable, and this Agreement
constitutes the legal, valid and binding agreement of such
party, enforceable against it in acordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to editors' rights generally and
general principles of equity.
B. Broker/Dealer additionally represents and warrants as follows:
(i) It is registered as a broker and dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"),
and is a member in good standing of the National Association f
Securities Dealers, Inc. ("NASD").
(ii) It will comply with all applicable laws, rules and
regulations of, as well as any and all directives and
guidelines issued by any agency or other regulatory body with
authority over Broker/Dealer or over the premises on which
Broker/Dealer and its Subagents are soliciting the sale of
Contracts.
<PAGE> 3
(iii) It is duly licensed as a corporate insurance agent, or
it has identified on Annex I hereto its Affiliates which hold
such licenses and are permitted to do so under applicable
laws.
3. Subagents. Broker/Dealer is authorized to recommend Subagents for
appointment to solicit sales of the Contracts. Broker/Dealer is
responsible for investigating the character, work experience and
background of any proposed Subagent prior to recommending appointment
by Insurer. No Subagent shall act on behalf of Insurer until properly
appointed by Insurer. To the extent that Exhibit 1 does not include all
annuity Contracts of Insurer which are registered as securities under
the Federal Securities laws, Broker/Dealer is responsible for ensuring
that its Subagents, unless otherwise agreed to with Insurer in writing,
do not offer to sell any other variable annuity contracts issued by
Insurer, other than the Contracts, unless a selling agreement with
respect thereto has been executed by the parties. Broker/Dealer is
responsible for supervising the activities of its Subagents and for
ensuring that Subagents are properly licensed and in compliance with
all applicable federal, state and local laws and regulations and all
rules and procedures of Insurer. Broker/Dealer shall notify Insurer
promptly, in writing, of any giving or receiving of notice of
termination of any subagent. Insurer reserves the right to refuse to
appoint any proposed Subagent and to terminate any relationship with
any Subagent, with or without cause, at any time. By submitting a
Subagent for appointment, Broker/Dealer warrants that: (1) such
Subagent is recommended for appointment; (2) such Subagent is fully
licensed under applicable laws to transact business with Insurer and is
a duly registered representative of Broker/Dealer; and (3) all
background investigations required by state and federal laws have been
made with respect to such Subagent.
4. Sales Material.
A. Broker/Dealer shall not use any written or audiovisual sales
material (including prepared scripts for oral presentations)
in connection with the sales of the Contracts or solicitations
hereof, unless such material has been provided by, or approved
in writing in advance of uch use by, the Insurer and
Distributor.
B. In accordance with the requirements of federal and certain
state laws, Broker/Dealer shall, to the extent required by
such laws, maintain complete records indicating the manner and
extent of distribution of any such sales material. This
material shall be made available to appropriate federal and
state regulatory agencies as required by law or regulation and
to Distributor and Insurer upon written request.
5. Prospectuses. For any Contract which is a registered security,
Broker/Dealer warrants that solicitation will be made by use of
currently effective prospectuses for the Contract and the underlying
funds; and if required by state law, the Statement of Additional
Information for the Contract; that the prospectuses will be delivered
concurrently with each sales presentation and that no statements shall
be made to a client superseding or controverting or otherwise
inconsistent with any statement made in the prospectus. The Insurer and
Distributor shall furnish Broker/Dealer, at no cost to such party,
reasonable quantities of currently effective prospectuses.
6. Conduct of Business.
A. Broker/Dealer will fully comply with the requirements of all
applicable laws, rules and regulations of regulatory
authorities (including self-regulatory organizations) having
jurisdiction over the activities of Broker/Dealer or over the
activities contemplated by this Agreement to be conducted by
Broker/Dealer.
B. Neither Broker/Dealer nor any Subagent shall solicit an
application from, or recommend the purchase of a Contract to,
an applicant without having reasonable grounds to believe, in
accordance with, among other things, applicable regulations of
any state insurance commission, the Securities and Exchange
Commission ("SEC") and the NASD, that such purchase is
suitable for the applicant. While not limited to the
following, a determination of suitability shall be based on
information supplied after a reasonable inquiry concerning the
applicant's insurance and investment objectives and
<PAGE> 4
financial situation and needs.
C. Broker/Dealer has or will have established, prior to its
commencement of any solicitation of sales of Contracts
pursuant to the terms of this Agreement, such rules,
procedures, supervisory and inspection techniques as necessary
to diligently supervise the activities of its Subagents
pursuant to this Agreement and to ensure compliance with the
terms of this Agreement necessary to establish diligent
supervision. Broker/Dealer shall be responsible for securities
training, supervision and control of its Subagents in
connection with their solicitation activities with respect to
the Contracts and shall supervise compliance with applicable
federal and state securities laws and NASD requirements in
connection with such solicitation activities. Broker/Dealer
will observe, and will comply with, all requirements of any
bank on whose premises Broker/Dealer engages in sales
activities pursuant to this Agreement. Upon request by Insurer
or Distributor, Broker/Dealer will furnish appropriate records
as are necessary to establish diligent supervision.
D. Broker/Dealer will fully comply with the requirements of
applicable state insurance laws and regulations and will
maintain all books and records and file all reports required
thereunder to be maintained or filed by a licensed insurance
agent. Broker/Dealer shall comply with the terms and
conditions of any letter issued by the Staff of the SEC with
respect to the non-registration as a broker-dealer under the
1934 Act of a corporation licensed as an insurance agent and
associated with a registered broker-dealer. Broker/Dealer
shall notify Distributor immediately in writing if
Broker/Dealer fails to comply with any such terms and
conditions and shall take such measures as may be necessary to
comply with any such terms and conditions.
E. Broker/Dealer shall promptly notify Insurer and Distributor of
any written customer complaint or notice of any regulatory
investigation or proceeding received by Broker/Dealer or any
Subagent relating to a Contract or any activities undertaken
in connection with this Agreement. Insurer and Broker/Dealer
shall each cooperate fully in any investigation or proceeding
including but not limited to any securities or insurance
regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts.
F. Broker/Dealer shall pay all expenses incurred by it in the
performance of this Agreement unless otherwise specifically
provided for in this Agreement or in a writing signed by
Insurer and/or Distributor and Broker/Dealer.
G. Applications shall be taken only on preprinted application
forms supplied by the Insurer. The Contract forms and
applications are the sole property of the Insurer. No person
other than the Insurer has the authority to make, alter or
discharge any policy, Contract application, Contract
certificate, supplemental contract or form issued by the
Insurer. No person other than the Insurer has the right to
waive any provision with respect to any Contract or policy. No
person other than the Insurer has the authority to enter into
any proceeding in a court of law or before a regulatory agency
in the name of or on behalf of the Insurer.
H. Broker/Dealer and Subagent shall accept premiums in the form
of a check or money order made payable to Insurer.
Broker/Dealer shall ensure that all checks and money orders
and applications for the Contracts received by it or any
Subagent are remitted promptly to Insurer. In the event that
any other premiums are sent to a Subagent or Broker/Dealer
rather than to Insurer, they shall promptly remit such
premiums to Insurer. Broker/Dealer acknowledges that if any
premium is held at any time by it, such premium shall be held
on behalf of Insurer, and Broker/Dealer shall segregate such
premium from its own funds and promptly remit such premium to
Insurer. All such premiums, whether by check, money order or
wire, shall at all times be the property of Insurer.
I. Upon issuance of a Contract by Insurer and delivery of such
Contract to Broker/Dealer, Broker/Dealer shall promptly
deliver such Contract to its purchaser. For purposes of this
provision, "promptly" shall be deemed to mean not later than
five calendar days, or such
<PAGE> 5
shorter period as is reasonable under the circumstances.
Broker/Dealer shall return promptly to Insurer all receipts
for delivered Contracts, all undelivered Contracts and all
receipts for cancellation, in accordance with the instructions
from Insurer.
J. Unless required by a determination of suitability, during the
term of this Agreement and after termination hereof,
Broker/Dealer covenants on behalf of itself and any Subagent
appointed hereunder, that they shall not solicit, induce or
attempt to solicit or induce Contract owners to terminate,
surrender, cancel, replace or exchange such Contract.
Broker/Dealer acknowledges and agrees that the provisions
contained in this Section 6 may be enforced by an action for
an injunction, as well as or in addition to any action for
damages.
7. Commission Payments.
A. Broker/Dealer shall be entitled to receive a commission based
upon premiums received and accepted by the Insurer for
Contracts issued pursuant to this Agreement, based on the
applicable rate of commission set forth in the Commission
Schedule attached hereto as Exhibit 1 which is incorporated
herein by reference. Broker/Dealer shall be solely responsible
for the payment of any commission or consideration of any kind
to Subagents.
B. In no event shall the Insurer be liable for the payment of any
commissions with respect to any solicitation made, in whole or
in part, by any person not appropriately licensed and
registered prior to the commencement of such solicitation.
C. If a Contract is returned to the Insurer pursuant to the "Free
Look" provision or any other right to examine provision of the
Contract, the full commission paid by the Insurer will be
unearned and shall be returned to the Insurer upon demand or,
in the absence of such demand, charged back to the recipient
of the commission. Broker/Dealer covenants and agrees to
promptly deliver Contracts and to hold the Insurer harmless
from and against any claim arising from market loss resulting
from their breach of this covenant.
D. In no event shall Insurer incur obligations under this
Agreement to issue any Contracts or pay any commission in
connection therewith if the Contract owner is over the maximum
issue age with respect to that product when the Contract
application was accepted. With respect to such Contracts, the
full commission paid by the Insurer will be unearned and shall
be returned to the Insurer upon demand or, in the absence of
such demand, charged back to the recipient of the commission.
E. With respect to any Contract that is rescinded, as determined
by the Insurer in its sole discretion (other than a rescission
with respect to which a surrender charge applies), or if the
Insurer otherwise determines that a commission has not been
earned (but such determination may not contravene any other
provision of this Agreement), 100% of such unearned commission
will be returned to the Insurer upon demand or, in the absence
of such demand, charged back to the recipient of the
commission.
F. Compensation for the sale of any Contract which is renewed,
changed, exchanged or otherwise converted from any other
contract issued by the Company shall be paid according to the
Insurer's guidelines and practices.
G. With respect to any Contract, or group of Contracts which the
Insurer in its sole discretion deems to be a single case, and
which at the time of application submission the initial
purchase payment is greater than $500,000, the Insurer may
determine in its sole discretion that the commissions set
forth on Exhibit 1 not apply. In the event the Insurer
determines that the commission(s) do not apply, the Insurer
may establish an alternate commission for such Contract or
Contracts.
8. Indemnification
A. Broker/Dealer shall indemnify, defend and hold harmless
Insurer and Distributor and
<PAGE> 6
each person who controls or is associated with Insurer or
Distributor within the meaning of the federal securities laws
and any director, officer, corporate agent, employee, attorney
and any representative thereof, from and against all losses,
expenses, claims, damages and liabilities (including any costs
of investigation and legal expenses and any amounts paid in
settlement of any action, suit or proceeding of any claim
asserted) which result from, arise out of or are based upon:
(i) any breach by Broker/Dealer or its Affiliates of any
representation, warranty or other provision of this Agreement,
including any acts or omissions of Broker/Dealer, Affiliates,
Subagents and other associated persons; or
(ii) any violation by Broker/Dealer, any Affiliate or any Subagent
of any federal or state securities law or regulation,
insurance law or regulation or any rule or requirement of the
NASD;
(iii) the use by Broker/Dealer, any Affiliate or any Subagent of any
sales or promotional material which has not received specific
written approval of Insurer and Distributor as provided in
Section 4 of this Agreement, any oral or written
misrepresentations or any unlawful sales practices concerning
the Contracts by Broker/Dealer, any Affiliate or any Subagent;
or
(iv) Claims by Subagents or other agents or representatives of
Broker/Dealer for commissions or other compensation or
remuneration of any type.
B. The indemnification provided for herein shall survive
termination of this Agreement.
9. Fidelity Bond. Broker/Dealer represents that all directors, officers,
employees, representatives and/or Subagents who are appointed pursuant
to this Agreement or who have access to funds of the Insurer are and
will continue to be covered by a blanket fidelity bond including
coverage for larceny, embezzlement or any other defalcation, issued by
a reputable bonding company. This bond shall be maintained at
Broker/Dealer's expense. Such bond shall be at least equivalent to the
minimal coverage required under the NASD Rules of Fair Practice,
endorsed to extend coverage to life insurance and annuity transactions.
Broker/Dealer acknowledges that the Insurer may require evidence that
such coverage is in force and Broker/Dealer shall promptly give notice
to the Insurer of any notice of cancellation or change of coverage.
Broker/Dealer assigns any proceeds received from the fidelity bond
company to the Insurer to the extent of the Insurer's loss due to
activities covered by the bond. If there is any deficiency,
Broker/Dealer will promptly pay the Insurer that amount on demand, and
Broker/Dealer shall indemnify and hold harmless the Insurer from any
deficiency and from the cost of collection.
10. Market Timer Program. Insurer has available a Market Timer Program
which allows a market timer service to effect multiple transfers or
other transactions. Parties may use this program at the discretion of
Insurer and upon execution of a Market Timer Agreement. Among other
provisions, the Market Timer Agreement specifies that if the impact of
processing exchange transactions received from all outside sources is
deemed to be injurious to one of the separate accounts or a subaccount
thereof, then Insurer in its sole discretion may elect not to process
the exchanges and that Insurer will notify the Market Timer Service of
the inability to process the requested exchange. Insurer reserves the
right to terminate participation in or the entire Market Timer Program
at any time and for any reason.
11. RapidApp Program. If applications are transmitted to the Insurer
pursuant to the Insurer's RapidApp Program, the following provisions
shall apply to such applications and Contracts issued pursuant to the
RapidApp Program.
A. Broker/Dealer agrees to communicate with owners of the
Contracts issued through the RapidApp Program in order to
obtain and deliver to the Insurer the signed confirmation for
the Contract. Broker/Dealer further agrees to provide any
assistance or cooperation required to enforce a Contract
issued under the RapidApp Program which shall include, but not
be limited to, providing the Insurer access to recordings of
telephone conversations with customers containing their
consent to the purchase of Contracts, or
<PAGE> 7
providing statements or affidavits from such Subagents as to
the customer's consent to the making of the Contract.
B. In the event the owner of a Contract repudiates or rescinds
the Contract and the Insurer, in its sole discretion, waives
any surrender charges, the full commission paid by the Insurer
will be returned to the Insurer upon demand or, in the absence
of such demand, charged back to the recipient of the
commission. In addition, all amounts equal to any market loss
arising from such rescission or repudiation will be paid by
Broker/Dealer on demand, or in the absence of such demand,
charged back to Broker/Dealer.
C. Broker/Dealer agrees that it will be solely responsible for
the transmission or failure of transmission of application
information to the Insurer. Broker/Dealer warrants that all
application information will be accurate and can be relied
upon by the Insurer.
D. Broker/Dealer agrees to pay the Insurer all amounts equal to
any market loss resulting from the misallocation of the
initial purchase payment into the subaccounts, which
misallocation was the result of Insurer relying on
Broker/Dealer's or their Subagents' application information.
In the absence of a demand for payment, such amounts shall be
charged back to Broker/Dealer.
E. Broker/Dealer agrees that its Subagents who are resident and
licensed in those jurisdictions approved by the Insurer may
submit applications to the Insurer pursuant to the RapidApp
Program and agree to the provisions of this Section 11.
Broker/Dealer acknowledges that agreeing to the provisions of
this Section 11 does not require its Subagents to submit all
applications to the Insurer pursuant to the RapidApp Program.
12. Termination.
A. Normal Termination. This Agreement shall continue for an
indefinite term, subject to the termination by either party
upon written notice to the other parties hereto, which shall
be effective upon receipt thereof. In addition, Insurer may
terminate this Agreement without notice if Broker/Dealer fails
to satisfy the Insurer's production requirements, as
determined in the sole discretion of the Insurer.
B. Automatic Termination for Cause. This Agreement shall
automatically terminate upon: (1) a material breach of this
Agreement, including without limitation the failure to comply
with the laws or regulations of any state or other
governmental agency or body having jurisdiction over the sale
of insurance; and (2) the suspension, revocation or
non-renewal of any then required insurance or securities
license of Broker/Dealer or any of its Affiliates, or the
deregistration of the Broker/Dealer or its termination of
membership with the NASD.
C. Rights and Obligations. Upon termination of this Agreement,
except as otherwise provided herein, all authorizations,
rights and obligations shall cease. If this Agreement is
terminated for cause as described above, Broker/Dealer's right
to receive compensation shall immediately terminate.
13. General Provisions.
A. Waiver. Waiver by any of the parties to promptly insist upon
strict compliance with any of the obligations of any other
party under this Agreement will not be deemed to constitute a
waiver of the right to enforce strict compliance.
B. Independent Contractor. Broker/Dealer is an independent
contractor and its Subagents who are appointed as insurance
agents of Insurer are agents of Broker/Dealer and not
employees, agents or representatives of Insurer or
Distributor.
C. Independent Assignment. No assignment of this Agreement or of
commissions or other payments under this Agreement shall be
valid without the prior written consent of the Insurer.
<PAGE> 8
D. Notice. Any notice pursuant to this Agreement shall be mailed,
postage paid, to the last address communicated by the
receiving party to the other parties to this Agreement.
E. Severability. To the extent this Agreement may be in conflict
with any applicable law or regulation, this Agreement shall be
construed in a manner not inconsistent with such law or
regulation. The invalidity or illegality of any provision of
this Agreement shall not be deemed to affect the validity or
legality of any other provision of this Agreement.
F. Amendment. No Amendment to this Agreement shall be effective
unless in writing and signed by all the parties hereto.
G California Law. This Agreement shall be construed in
accordance with the laws of the State of California.
H. Effectiveness. This Agreement shall be effective as of the
date set forth above.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties to this Agreement as of the date set forth above.
"INSURER":
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: __________________________________
Name:
Title:
"DISTRIBUTOR":
SUNAMERICA CAPITAL SERVICES, INC.
By: __________________________________
Peter Harbeck, President
"BROKER/DEALER":
______________________________________
By: __________________________________
<PAGE> 9
ANNEX I
This Annex I appends that certain Selling Agreement dated
_______________________ (the "Agreement") between Anchor National Life Insurance
Company, SunAmerica Capital Services, Inc. and _______________________________
("Broker/Dealer"). Each of the undersigned is affiliated with Broker/Dealer and
represents that it holds the necessary corporate insurance license to act as
general agent in connection with the sale of Contracts, as defined in the
Agreement, in those states so identified next to its name. By executing this
Annex I each of the undersigned agrees to be bound by the terms and conditions
of the Agreement as if it were a party thereto.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMPANY STATE(S) TAX I.D. NO.
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
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Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMPANY STATE(S) TAX I.D. NO.
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
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Signature:
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Signature:
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Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
Signature:
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
BANK RIDER
This rider is appended to that certain Selling Agreement date
____________________________between Anchor National Life Insurance Company
("Insurer"), SunAmerica Capital Services, Inc. ("Distributor") and
_____________________________, together with its duly licensed insurance
affiliates indicated on Annex I of the Selling Agreement ("Broker/Dealer"). This
Rider is to be executed by any Broker/Dealer which is selling, or intends to
sell, Contracts on the premises of any federal or state chartered bank, thrift
or savings and loan institution (collectively, "Bank"). Pursuant hereto,
Broker/Dealer represents and warrants that it will comply with the requirements
of applicable laws, regulations and guidelines of any regulatory authority
having jurisdiction over the activities of Bank or occurring on Bank premises,
including without limitation, the Interagency Statement on Retail Sales of
Nondeposit Investment Products (Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation, Office of the Comptroller of the
Currency, and Office of Thrift Supervision, February 14, 1994) and any
subsequent release designed to provide governance to banks in connection with
the sale of nondeposit investment products ("applicable banking laws").
Broker/Dealer agrees that it shall be responsible for ensuring that applicable
banking laws are complied with in connection with the activities undertaken
pursuant to the Selling Agreement, including without limitation, ensuring that
all advertisements and sales literature used by Broker/Dealer comply with
applicable banking laws. Broker/Dealer further agrees that it shall inform the
Insurer in writing of any legends and other disclosures that are required by
applicable banking laws to be contained in advertisements or sales literature
for policies issued by the Insurer.
"Broker/Dealer"
By: _______________________________
_______________________________
Printed Name & Title
<PAGE> 12
EXHIBIT 1
Commission Schedule
This Commission Schedule is hereby incorporated in and made a part of the
Selling Agreement dated as of _________________________ ("Agreement") by and
between Anchor National Life Insurance Company ("Insurer"), SunAmerica Capital
Services, Inc. and __________________________________ together with its duly
licensed insurance affiliates indicated on Annex I to the Agreement
(collectively, "Broker/Dealer").
1. In no event shall the Insurer be liable for the payment of any commissions
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and registered prior to the commencement of such
solicitation.
2. If a Contract is returned to the Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract, the full
commission paid by the Insurer will be unearned and shall be returned to the
Insurer upon demand or, in the absence of such demand, charged back to the
recipient of the commission.
3. With respect to any Contract that is rescinded, as determined by the Insurer
in its sole discretion (other than a rescission with respect to which a
surrender charge applies), or if the Insurer otherwise determines that a
commission has not been earned (but such determination may not contravene any
other provision of this Agreement), 100% of such unearned commission will be
returned to the Insurer upon demand or, in the absence of such demand, charged
back to the recipient of the commission.
4. The following commission rates shall apply to Contracts issued by Insurer.
Commissions are paid in respect of the aggregate purchase payments received and
accepted by the Insurer with complete application information and documentation
as required by the Insurer or as a subsequent purchase payment under a Contract
after the Contract is in force. In addition, if an annual trail commission is
applicable, it will be payable in quarterly installments. The trail commission
installment for each calendar quarter will be calculated based on the Contract
Value as of the end of such quarter. Trail commissions are not payable on any
Contract that has been surrendered, annuitized or under which a death benefit
has been paid.
AMERICAN PATHWAY II CONTRACTS. Commissions will be paid in the amount of
five-and-one-half percent (5.5%). Commissions are paid only on the subsequent
purchase payments received and accepted by the Insurer under a contract which is
in force.
ICAP II CONTRACTS. Commissions will be paid in the amount of five percent (5%).
ICAP II GROUP CONTRACTS. Commissions will be paid in the amount of five percent
(5%).
With respect to any ICAP II Group Contracts, the following commission
chargebacks will apply:
(1) Upon termination of the Contract, all commissions paid on
premiums received in the 12 months prior to termination of the
Contract will be deemed unearned and shall be returned to the
Insurer upon demand or, in the absence of such demand, charged
back to the recipient of the commission; and
(2) If, within the first four years of the Contract, any
participant under the Contract retires or terminates
employment resulting in a withdrawal of the participant's
funds from the Contract, all commissions paid on behalf of
such participant's contributions will be deemed unearned and
shall be returned to the Insurer upon demand or, in the
absence of such demand, charged back to the recipient of the
commission; if no premium information is available with
respect to that participant, the charge back will be
calculated based upon the amount of the withdrawal of funds.
<PAGE> 13
POLARIS/POLARISII CONTRACTS (OTHER THAN POLARIS UNALLOCATED GROUP CONTRACTS).
With respect to Polaris/PolarisII Contracts issued to persons age 80 or younger
(at date of issue), commissions will be paid pursuant to one or more of the
options set forth below, as selected by Broker/Dealer or General Agent. If more
than one commission option is chosen, Broker/Dealer agrees that Subagents may
select from the specified commission options at the time a Contract is sold,
which selection may not be changed at a later time. If more than one commission
option is selected, Broker/Dealer must also specify a "default" commission
option, which will apply in the event the Subagent does not select a commission
option at the time of the sale of a Contract. If Broker/Dealer does not specify
a "default" commission option, the "default" commission option shall be Option
2.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Option 1 6.00% None
- ---------------------------------------------------------------------------------------------------
Option 2 5.25% For Contracts in force from 15 through 84 months,
.25% annually, payable in .0625% quarterly installments.
For Contracts in force from 87 months or
longer, .40% annually, payable in .10%
quarterly installments.
- ---------------------------------------------------------------------------------------------------
Option 3 2.50% For Contracts in force 15 months or longer,
1.00% annually, payable in .25% quarterly installments.
- ---------------------------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
If more than one commission option has been selected, a "default" commission option must be selected
(choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
</TABLE>
With respect to Polaris/PolarisII Contracts (other than Polaris Unallocated
Group Contracts) sold to persons age 81 through 90 (at date of issue),
commissions will be paid as set forth below, including the applicable annual
trail commission.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Issue Commission Rate Annual
Age Trail Commission
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
81-85 1.50% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- -----------------------------------------------------------------------------------------------
86-90 1.25% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- -----------------------------------------------------------------------------------------------
</TABLE>
With respect to any Polaris/PolarisII Contract sold with a Nursing Home
Endorsement to an owner who is, at the time of sale, confined to a nursing home
as such term is defined in the endorsement and the owner exercises his or her
rights under the endorsement to surrender the Contract within two years of the
date of issuance, the full commission paid by the Insurer will be unearned and
shall be returned to the Insurer upon demand or, in the absence of such demand,
charged back to the recipient of the commission.
<PAGE> 14
ANCHOR ADVISOR CONTRACTS. Commissions will be paid pursuant to the one or more
of the options set forth below, as selected by Broker/Dealer or General Agent.
If more than one commission option is chosen, Broker/Dealer agrees that
Subagents may select from the specified commission options at the time a
Contract is sold, which selection may be changed at a later time. If more than
one commission option is selected, Broker/Dealer must also specify a "default"
commission option, which will apply in the event the Subagent does not select a
commission option at the time of the sale of a Contract. If Broker/Dealer does
not specify a "default" commission option, the "default" commission option shall
be Option 1.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Options Commission Rate Annual Trail Commission Commission Chargeback
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Option 1 1.00% on purchase payments For Contracts in force 15 months or Upon termination of the Contract during
received during first 6 months longer, annual trail commissions first six months after issuance, all
after issuance; .50% on purchase will be paid in the amount of 1.00% commissions paid on purchase payments
payments received during the of account value, payable in .25% received will be deemed unearned and
second 6 months after issuance. quarterly installments. shall be returned to the Insurer upon
demand or, in the absence of such
demand charged back to the recipient of
the commission. Upon termination of
the Contract during second six months
after issuance, 50% of all commissions
paid on purchase payments received will
be deemed unearned and shall be
returned to the Insurer upon demand or,
in the absence of such demand charged
back to the recipient of the commission.
If, on the first Contract anniversary,
withdrawals exceed 50% of the aggregate
purchase payments, .50% of the amount
withdrawn will be deemed unearned and
shall return to the Insurer upon demand
or, in the absence of such demand,
charged back to the recipient of the
commission.
- ------------------------------------------------------------------------------------------------------------------------------
Option 2 None For Contracts in force 3 months or None
longer, annual trail commissions
will be paid in the amount of 1.00%
of account value, payable in .25%
quarterly installments.
- ------------------------------------------------------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
If more than one commission option has been selected, a "default" commission option must be selected
(choose only one): [ ] Option 1
[ ] Option 2
</TABLE>
<PAGE> 15
POLARIS UNALLOCATED GROUP. Commissions will be paid pursuant to one or more of
the options set forth below, as selected by Broker/Dealer or General Agent. If
more than one commission option is chosen, Broker/Dealer and General Agent agree
that their Subagents may select from the specified commission options at the
time a Contract is sold, which selection may not be changed at a later time. If
more than one commission option is selected, Broker/Dealer or General Agent must
also specify a "default" commission option, which will apply in the event the
Subagent does not select a commission option at the time of the sale of a
Contract. If Broker/Dealer or General Agent do not specify a "default"
commission option, the "default" commission option shall be Option 2.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Option 1 4.50% None
- --------------------------------------------------------------------------------------------------
Option 2 4.00% For Contracts in force from 15 months or longer,
.20% annually, payable in .05% quarterly installments.
- --------------------------------------------------------------------------------------------------
Option 3 .80% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly installments.
- --------------------------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
If more than one commission option has been selected, a "default" commission option must be selected
(choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
</TABLE>
POLARIS UNALLOCATED GROUP TAKEOVER VERSION. Commissions will be paid in the
amount of one percent (1%) on the initial purchase payment. Annual trail
commissions for Contracts in force 3 months or longer will be in the amount of
one percent (1%) annually, payable in .25% quarterly installments. No
commissions will be paid on subsequent purchase payments.
SEASONS CONTRACTS. With respect to Seasons Contracts issued to persons age 80 or
younger (at date of issue), commissions will be paid pursuant to one or more of
the options set forth below, as selected by Broker/Dealer or General Agent. If
more than one commission option is chosen, Broker/Dealer agrees that Subagents
may select from the specified commission options at the time a Contract is sold,
which selection may not be changed at a later time. If more than one commission
option is selected, Broker/Dealer must also specify a "default" commission
option, which will apply in the event the Subagent does not select a commission
option at the time of the sale of a Contract. If Broker/Dealer does not specify
a "default" commission option, the "default" commission option shall be Option
2.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Option 1 6.00% None
- ---------------------------------------------------------------------------------------------------
Option 2 5.25% For Contracts in force from 15 through 84 months,
.25% annually, payable in .0625% quarterly installments.
For Contracts in force from 87 months or
longer, .40% annually, payable in .10%
quarterly installments.
- ---------------------------------------------------------------------------------------------------
Option 3 2.50% For Contracts in force 15 months or longer,
1.00% annually, payable in .25% quarterly installments.
- ---------------------------------------------------------------------------------------------------
</TABLE>
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
<PAGE> 16
<TABLE>
<S> <C>
If more than one commission option has been selected, a "default" commission option must be selected
(choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
</TABLE>
With respect to Seasons Contracts sold to persons age 81 through 90 (at date of
issue), commissions will be paid as set forth below, including the applicable
annual trail commission.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Issue Commission Rate Annual
Age Trail Commission
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
81-85 1.50% For Contracts in force 15 months or
longer, .80% annually, payable in .20%
quarterly installments.
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
86-90 1.25% For Contracts in force 15 months or
longer, .80% annually, payable in .20%
quarterly installments.
- -----------------------------------------------------------------------------------------------
</TABLE>
Broker/Dealer, on behalf of itself and its Affiliates, acknowledges and agrees:
(1) to Insurer's policies with respect to commission chargebacks which are
provided for in the Agreement and herein; and (2) that it has selected the above
commission options, which can not be modified without providing Insurer a newly
executed commission schedule.
"BROKER/DEALER":
________________________________________
By: ____________________________________
Name:
Its:
<PAGE> 1
EXHIBIT 4
ANCHOR NATIONAL
Life Insurance Company [LOGO] Anchor National
11601 Wilshire Boulevard a SunAmerica Company
Los Angeles, CA 90025
This is an annuity contract on the life of the Annuitant. We will make periodic
annuity payments beginning on the Annuity Date, as set forth in this Contract.
This Contract is owned by you, the Contract Owner.
This Contract has been issued in return for the attached application and for the
initial Purchase Payment made.
TEN-DAY FREE LOOK
To be sure that you are satisfied with this Contract, you have a ten-day free
look. Within ten days of the day you receive this Contract, it may be returned
by delivering it or mailing it to us at our Annuity Service Office listed on the
Contract Data Page, or to the agent through whom it was purchased. Within seven
days of receipt of this Contract by us, we will pay you the Contract Value
computed at the end of the Valuation Period during which this Contract is
received by us.
Signed for the Company.
/s/ SUSAN L. HARRIS /s/ ROBERT P. SALTSMAN
- -------------------------- ------------------------------
Susan L. Harris Robert P. Saltzman
Secretary President
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
PLEASE READ THIS CONTRACT CAREFULLY, IT DEFINES YOU LEGAL RIGHTS AND IS A
CONVENIENT SOURCE OF INFORMATION AND REFERENCE IN HELPING YOU FULLY UNDERSTAND
AND BENEFIT FROM YOUR CONTRACT.
THE VARIABLE PROVISIONS OF THIS CONTRACT
CAN BE FOUND ON PAGES 6 AND 9.
<PAGE> 2
CONTRACT DATA PAGE
ANNUITANT: CONTRACT NUMBER:
JOHN D. SMITH 009000001
ISSUE DATE: CONTRACT OWNER:
APRIL 25, 1990 JOHN D. SMITH
ANNUITY DATE: INITIAL PURCHASE PAYMENT:
AUGUST 01, 2016 $3,000.00
NON-QUALIFIED PLAN
ANNUITY SERVICE OFFICE:
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ADMINISTRATIVE SERVICES
P.O. BOX 1600
DENVER, CO 80201-1600
MONEY MARKET PORTFOLIO
GOVERNMENT AND QUALITY BOND PORTFOLIO
FIXED INCOME PORTFOLIO
GROWTH PORTFOLIO
HIGH YIELD PORTFOLIO
AGGRESSIVE GROWTH PORTFOLIO
FOREIGN SECURITIES PORTFOLIO
CONVERTIBLE SECURITIES PORTFOLIO
MULTI-ASSET PORTFOLIO
AGGRESSIVE MULTI-ASSET PORTFOLIO
NATURAL RESOURCES PORTFOLIO
TARGET '98 PORTFOLIO
GENERAL ACCOUNT
A TOTAL WITHDRAWAL OR A PARTIAL WITHDRAWAL IN EXCESS OF THE FREE WITHDRAWAL
AMOUNT WILL BE SUBJECT TO A WITHDRAWAL CHARGE ON PURCHASE PAYMENTS WITHDRAWN
BEFORE THE END OF THE FIFTH CONTRIBUTION YEAR. THE WITHDRAWAL CHARGE IS 5% IN
THE FIRST CONTRIBUTION YEAR AND REDUCES BY 1% EACH FOLLOWING CONTRIBUTION YEAR,
SO THAT THERE IS NO CHARGE IN THE SIXTH AND LATER CONTRIBUTION YEARS.
FOR USE WITH
VARIABLE ANNUITY ACCOUNT ONE
<PAGE> 3
DEFINITIONS
ACCUMULATION PERIOD - The period between the Issue Date of this Contract and the
Annuity Date, the build-up phase of this Contract.
ACCUMULATION UNIT - A unit of measurement which we use to calculate the Contract
Value during the Accumulation Period.
ANNUITANT - The person designated in the Application and shown on the Contract
Data Page to receive or who is actually receiving annuity payments.
ANNUITIZATION - The process by which an Owner converts from the Accumulation
Period to the Annuity Period. That is, you convert your Contract from the
build-up phase to the phase during which the Annuitant receive periodic annuity
payments.
ANNUITY DATE - The date on which annuity payments are to begin.
ANNUITY PERIOD - The period starting on the Annuity Date.
ANNUITY UNIT - A unit of measurement we use to calculate the amount of Variable
Annuity payments.
BENEFICIARY - The person designated to receive any benefits under this Contract
upon the death of the Annuitant during the Accumulation Period. If the Owner
dies during the Accumulation Period, the Beneficiary will, unless the Owner has
elected otherwise, become the Owner of this Contract.
CONTRACT OWNER OR OWNER - You, the person having the privileges of ownership
defined in this Contract. If the Owner dies during the Accumulation Period, the
Beneficiary will, unless the Owner has elected otherwise, become the Owner of
this Contract.
CONTRACT VALUE - The sum of the values of your interest in the Separate Account
Divisions.
CONTRACT YEAR - The period between anniversaries of the Issue Date of this
Contract.
CONTRIBUTION YEAR - Each Contract Year in which a Purchase Payment is made and
each succeeding year measured from the end of the Contract Year during which
such Purchase Payment was made.
DIVISION OR SEPARATE ACCOUNT DIVISION - A Division of the Separate Account
invested wholly in shares of one of the Eligible Portfolios.
ISSUED DATE - The date shown on the Contract Data Page on which the first
Contract Year and first Contribution Year begin.
NON-QUALIFIED PLAN - A retirement plan which does not receive favorable tax
treatment under Section 401, 403(b), 408 or 457 of the Internal Revenue Code.
PORTFOLIOS - One of the Portfolios shown on the Contract Data Page.
PURCHASE PAYMENTS - Amounts you pay to us under this Contract.
QUALIFIED PLAN - A retirement plan which receives favorable tax treatment under
Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.
SEPARATE ACCOUNT OR ACCOUNT - A segregated investment account entitled,
"Variable Annuity Account One", established by us.
VALUATION DATE - Monday through Friday except New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving,
and Christmas Day.
VALUATION PERIOD - The interval between two consecutive Valuation Dates measured
from 5:00 P.M. New York time.
WITHDRAWAL CHARGE - The charge assessed against certain withdrawals or
annuitizations of Accumulation Units in their first five (5) Contribution Year.
WITHDRAWAL VALUE - The Contract Value, less any premium tax payable if the
Contract is being annuitized, minus any applicable withdrawal Charge.
<PAGE> 4
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that you, subject to the minimums and
maximums given below, may change the amount and the frequency or timing of
Purchase Payments. The minimum initial Purchase Payment we will accept for a
Contract issued pursuant to a Non-Qualified Plan is $1,000. Subsequent Purchase
Payments must be at least $500.
The minimum initial Purchase Payment we will accept for a Contract issued
pursuant to a Qualified Plan is $100. Purchase Payments will be allocated to one
or more Separate Account Divisions. At least $500 must be allocated to each
Division selected before an allocation can be made to an additional Division. If
the Contract Value is less than $500, and no Purchase Payments have been made
during the previous three full calendar years, we reserve the right, after 60
days written notice to you, to terminate this Contract and distribute the
Withdrawal Value to you.
ACCUMULATION PERIOD
PURCHASE PAYMENTS AND CONTRACT VALUE - We will credit a Contract with the number
of Accumulation Units in a Division which results from dividing the Purchase
Payment(s) allocated to that Division, or the amount transferred into the
Division, by the Accumulation Unit Value for that Division at the end of the
Valuation Period next concluding after the allocation or transfer.
The Contract Value for any Valuation Period is determined by multiplying the
number of Accumulation Units credited to each Division by the Accumulation Unit
Value for that Division at the end of the Valuation Period and then adding the
resultant values.
ACCUMULATION UNIT VALUE - The Accumulation Unit Value of a Separate Account
Division for any Valuation Period is calculated by subtracting (2) from (1) and
dividing the result by (3) where:
(1) is the total value of the assets of the Separate Account Division minus
total liabilities;
(2) is the cumulative unpaid charge for assumption of mortality and expense
risks;
(3) is the number of Accumulation Units outstanding at the end of such
Valuation Period.
During the Accumulation Period, each Separate Account Division is assessed with
a daily charge for mortality and expense risks. The charge will equal an
aggregate of 1.25% per annum of the average daily net asset value of each
Division. Net asset value of each Division for any Valuation Period is
calculated by dividing (1) above by (3) above.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
RECORDS MAINTENANCE CHARGE - During the Accumulation Period, a Records
Maintenance Charge of $30 is assessed each Contract Year against each Contract
in force on the anniversary of the Issue Date. If a total surrender of Contract
Value is made, the charge will be assessed as of the date of surrender. If the
Contract participates in more than one Separate Account Division, an equal share
of the $30 charge will be made against each Division. The number of Accumulation
Units representing your Contract's interest in the affected Separate Account
Divisions will be reduced to reflect the Records Maintenance Charge.
ADMINISTRATIVE EXPENSE CHARGE - During the Accumulation period, each Separate
Account Division is assessed with a daily charge for mortality and expense
risks. The charge will equal an aggregate of .15% per annum of the average daily
net asset value of each Division. Net asset value of each Division for any
Valuation Period is calculated dividing (1) by (3) as described in the
Accumulation Unit Value provision. This charge will be reduced to the extent it
exceeds that required for administrative expenses.
TRANSFERS DURING ACCUMULATION PERIOD - You may transfer all or part of the
Contract Value among Separate Account Divisions subject to the following
conditions:
(1) the minimum amount which may be transferred from a Division is $500 or,
the remaining Contract Value in a Separate Account Division if less
than $500;
(2) no partial transfer can be made if your remaining Contract Value in a
Separate Account Division will be less than $500 after the transfer;
<PAGE> 5
(3) transfers will be honored on the Valuation Date next following receipt
by us of a written direction (containing all required information);
(4) if you make a transfer within 30 days of the Issue Date, a transfer fee
of $25 ($10 in Pennsylvania and Texas) will be charged.
We reserve the right to at any time suspend, modify, or terminate the transfer
privilege at any time with notice.
The Accumulation Units credited to a Separate Account Division will be reduced
based on the Accumulation Unit Value at the end of the Valuation Period next
following the Valuation Period during which we receive a completely detailed
request for a transfer. Accumulation Units will be credited to the Contract
Value in the Separate Account Division to which the transfer is being made at
the same time.
TOTAL WITHDRAWAL DURING THE ACCUMULATION PERIOD - You may, during the
Accumulation Period, withdraw all the Contract Value remaining after deduction
of the Withdrawal Charge, if any.
An election for total withdrawal must be made in writing to us at our Annuity
Service Office. Payment made to us in honoring an election for total withdrawal
prior to receipt by us of notice of the death of the Annuitant or the Owner will
discharge our obligations under this Contract.
PARTIAL WITHDRAWALS DURING THE ACCUMULATION PERIOD - You may, during the
Accumulation Period, withdraw portions of the Contract Value, subject to the
following conditions:
(1) each partial withdrawal must be for an amount which is not less than
$500 or, if smaller, the remaining value in a Separate Account
Division;
(2) the remaining value in each Separate Account Division from which a
partial withdrawal is requested must be at least $500 after the partial
withdrawal is completed;
(3) an election to make a partial withdrawal must be made in writing to us
at our Annuity Service Office;
(4) the election must indicate the amount(s) and the Separate Account
Division(s) from which the partial withdrawal is requested;
(5) the maximum amount of a partial withdrawal will be equal to the
Contract Value in the Division minus the amount of the Withdrawal
Charge, if any; and
(6) you have the right to specify the Division from which a withdrawal is
to be made.
Any payment made by us for partial withdrawal prior to receipt by us of notice
of the death of the Annuitant or the Owner will discharge our obligation under
this Contract to the extent of the payment.
IF A WITHDRAWAL CHARGE IS APPLICABLE. THE REDUCTION IN THE CONTRACT VALUE
REQUIRED TO PRODUCE THE AMOUNT F THE PARTIAL WITHDRAWAL REQUESTED WILL BE
GREATER THAN THE AMOUNT ACTUALLY PAID BY US TO YOU. THE ACTUAL DOLLAR AMOUNT OF
A PARTIAL WITHDRAWAL REQUESTED WILL BE THE AMOUNT PAID TO YOU.
FREE WITHDRAWAL AND WITHDRAWAL CHARGES -
(1) all Purchase Payments in a given Contract Year are totalled and are
used separately in calculating applicable Withdrawal Charges.
(2) all withdrawals will be assessed first against Purchase Payments in the
earliest Contract Years.
(3) The amount which may be withdrawn in any Contract Year without a
Withdrawal Charge is 10% of the aggregate Purchase Payments made as of
the date of the partial withdrawal, less prior withdrawals. A free
withdrawal can be made only once per Contract Year and must be the
first withdrawal in that Contract Year. No free withdrawal is permitted
during the first Contract Year.
(4) any amount withdrawn which exceeds the limitations specified in (3)
above will be subject to a Withdrawal Charge in accordance with the
Withdrawal Charge Table.
<PAGE> 6
WITHDRAWAL CHARGE TABLE
CONTRIBUTION YEAR RATE
----------------- ----
First 5%
Second 4%
Third 3%
Fourth 2%
Fifth 1%
Sixth and later 0%
The Rate applies to Purchase Payments.
WITHDRAWAL PROCEDURES - The Accumulation Units credited to a Contract in a
Separate Account Division will be reduced based on the Accumulation Unit Value
at the end of the Valuation Period during which an election of withdrawal
completely contained all required information is received by us at our Annuity
Service Office. An amount withdrawn will be paid within seven calendar days
after the date proper written election is received by us, except as provided
below.
SUSPENSION OF WITHDRAWAL PRIVILEGES - We may suspend the right of withdrawal
privileges or delay payment more than seven calendar days:
(1) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings);
(2) when trading in the markets the Account or a Portfolio normally
utilizes is restricted or an emergency exists as determined by the
Securities and Exchange Commission so that disposal of the Account's or
Portfolio's investments or determination of Accumulation Unit Value is
not reasonably practicable; or
(3) for such other periods as the Securities and Exchange Commission by
order may permit for protection of the Contract Owners.
DEATH BENEFIT
The Death Benefit is equal to the greater of:
(1) the Contract Value at the end of the Valuation Period during which Due
Proof of death and an election of the type of payment by the
Beneficiary is received by us at our Annuity Service Office; or
(2) the total dollar amount of Purchase Payments minus the total dollar
amount of partial withdrawals and applicable withdrawal charges; and
(3) after the firth Contract Year, the Contract Value at the last Contract
Anniversary minus the total dollar amount of partial withdrawals made
since that anniversary.
Payment of the Death Benefit may be made in one lump sum or applied under one of
the Annuity Options.
Due Proof of death means a certified copy of a death certificate or a certified
copy of a decree of a court of competent jurisdiction as to a finding of death,
or written statement by a Doctor of Medicine who attended the deceased at time
of death, or any other proof satisfactory to us.
DEATH OF ANNUITANT - The Death Benefit will be payable to the Beneficiary upon
receipt by us of Due Proof of the Annuitant's death during the Accumulation
Period.
DEATH OF OWNER
The following section applies only if this Contract is issued on a non-qualified
basis and if either of the two following conditions exist:
(A) The Owner and the Annuitant are the same individual and that individual
dies during the Accumulation Period; or
(B) The Owner and Annuitant are different persons and the Owner dies during
the Accumulation Period prior to the Annuitant's death.
If either of the above conditions occur, the following provisions apply:
(1) If the Beneficiary is the spouse of the Owner, then the Beneficiary
becomes the Owner and this Contract remains in full force and effect.
<PAGE> 7
(2) If the Beneficiary is a natural person and not the spouse of the Owner,
the Beneficiary becomes the Owner. The Beneficiary becomes the Owner.
The Beneficiary can elect to have the existing Contract Value paid
under one of the Annuity Options set forth in this Contract over a
period not extending beyond the life expectancy of the Beneficiary at
the time of the election: however, payments under any Annuity Option
selected must begin not later than one year after the date of death of
the previous Owner.
Alternatively, the Beneficiary may elect to receive a lump sum
distribution of the greater of: (a) the current Contract Value at the
time of election; or (b) the total amount of Purchase Payments made
under the Contract less the aggregate dollar amount of any partial
withdrawals. Under this alternative election, the lump sum must be paid
to the Beneficiary within five years of the previous Owner's death.
(3) If there is no Beneficiary or if the Beneficiary is not a natural
person, then the entire Contract Value must be paid out within five
years of the Owner's death.
ANNUITY PERIOD
ELECTION OF ANNUITY OPTION AND ALLOCATION OF ANNUITY PAYMENTS - Election of an
Annuity Option must be made by written notice to us at our Annuity Service
Office. The election may be made:
(1) by the Owner prior to the Annuity Date and Annuitant's death;
(2) by the Annuitant on the Annuity Date unless the Owner has restricted
the right to make an election; or
(3) by the Beneficiary upon the Annuitant's death unless the Owner has
restricted the right to make an election.
If the Contract Value to be applied is less than $5,000, we may make payment in
one lump sum. If the amount of the first scheduled payment is less than $50, we
may increase the interval between payments to a quarterly, semi-annual or annual
payment to make the first payment at least $50. Option 3 may be elected only if
the Contract Value to be applied is at least $20,000. Payment must be made to a
natural person referred to as the payee.
The amount we use in determining annuity payments under Options 1, 2, and 3,
subject to adjustment for any applicable Withdrawal Charge and premium taxes, is
the Contract Value at the end of the Valuation Period immediately preceding the
Valuation Period which includes the Annuity Date. If Option 1 or 2 is elected,
no Withdrawal Charge will apply.
Payment under Option 3 or in accordance with the Other Settlement Arrangements
section may subject the Contract Value to a Withdrawal Charge. If Option 3 is
elected, the Contract Value may be subject to a Withdrawal Charge in accordance
with the Withdrawal Charge Table.
If no other Annuity Option is elected, the amount payable will be made under
Option 1 with a 10 year period certain.
ANNUITY OPTIONS - The amount payable may be paid under one of the following
options or in any other manner agreed to by us:
OPTION 1 - LIFE ANNUITY WITH INSTALLMENTS GUARANTEED - We will make monthly
payments for the guaranteed period elected and then for the remaining lifetime
of the payee. The period elected may be only 10 or 20 years. If the payee dies
before the end of the guaranteed period, the present value, based on a 5% annual
interest rate, of remaining guaranteed payments will be paid to the payee's
estate or the Beneficiary.
OPTION 2 - JOINT AND SURVIVOR ANNUITY - We will pay the full monthly income
while both payees are living. Upon the death of either payee, income will
continue during the lifetime of the surviving payee at the percentage of such
full amount chosen when this option was elected.
OPTION 3 - INCOME FOR SPECIFIED PERIOD - We will make monthly payments for the
period elected but not less than 5 years or more than 30 years. The election
must be made for full twelve-month periods.
OTHER SETTLEMENT ARRANGEMENTS - Our agreement is necessary for other payment
methods.
VARIABLE ANNUITY - The Contract Value at the end of the Valuation Period
immediately preceding the Valuation Period which includes the Annuity Date will
first be reduced by the dollar amount of any Withdrawal Charge and then by any
applicable premium taxes. The remaining value will be used to calculate the
<PAGE> 8
first monthly annuity payment. For Annuity Options 1, 2 and 3, the first monthly
annuity payment will be based upon the Annuity Option elected and the
appropriate Annuity Option Table.
With respect to Options 1, 2 and 3, the number of Annuity Units for each
Separate Account Division for purposes of determining subsequent annuity
payments is determined by dividing the amount of the first monthly annuity
payment attributable to the Contract Value in that Separate Account Division by
the Annuity Unit Value for the Division at the end of the Valuation Period which
includes the Annuity Date. The number of Annuity Units per payment will remain
fixed unless a transfer is made. The amount of any subsequent annuity payments
will be determined by multiplying the number of Annuity Units per payment in
each Separate Account Division by the Annuity Unit Value for that Division at
the end of the Valuation Period immediately preceding the valuation Period which
includes the date on which payment is to be made and then adding the resultant
values. The Annuity Unit Value may increase or decrease from Valuation Period to
Valuation Period.
We guarantee that the dollar amount of each annuity payment after the first will
not be adversely affected by variations in actual expenses or by variations in
mortality experience from the expense and mortality assumptions on which the
first payment is based.
The Annuity Tables are based on the 1983 Table A, projected at Scale G with
interest at the rate of 5% per annum and assume births in year 1942. The amount
of each annuity payment will depend upon the sex and adjusted age of the
Annuitant, he joint annuitant, if any, or other payee. The adjusted age is
determined from the actual age nearest birthday at the time the first monthly
annuity payment is due according to the Table A below.
TABLE A
<TABLE>
<CAPTION>
Adjustment Adjustment
Calendar to Actual Calendar to Actual
Year of Birth Age Year of Birth Age
- --------------- ------------ -------------- ----------
<S> <C> <C> <C>
1899-1905 +6 1946-1951 -1
1906-1911 +5 1952-1958 -2
1912-1918 +4 1959-1965 -3
1919-1925 +3 1966-1972 -4
1926-1932 +2 1973-1979 -5
1933-1938 +1 1980-1985 -6
1939-1945 0
</TABLE>
ANNUITY UNIT VALUE - For each Separate Account Division, the value of an Annuity
Unit at the end of any Valuation Period is determined by multiplying the Annuity
Unit Value for the immediately preceding Valuation Period by the net investment
factor for the Valuation Period for which the Annuity Unit Value is being
calculated, and multiplying the result by an interest factor of .999866337 per
calendar day of such Valuation Period to offset the effect of the assumed rate
of 5.00% per annum in the Annuity Option Table.
The net investment factor for each Division for any Valuation Period is
determined by dividing:
(1) the value of an Accumulation Unit of the applicable Division as of the
end of the current Valuation Period: by
(2) the value of an Accumulation Unit of the applicable Division as of the
end of the immediately preceding Valuation Period.
TRANSFERS DURING THE ANNUITY PERIOD - During the Annuity Period, the payee(s)
may transfer the Contract Value in the Separate Account Divisions. To do so,
send a written request to our Annuity Service Office. A transfer may be made
subject to the following:
(1) a transfer may be made once each Contract Year;
(2) a request for a transfer must be received by us at our Annuity Service
Office at least 45 days before the Contract Anniversary as of which the
transfer will take effect;
(3) a transfer will be effected at the next Annuity Unit Value calculated
after we receive the transfer request;
(4) no transfer may be made during the first year of the Annuity Period;
(5) the entire interest in a Separate Account Division must be transferred.
<PAGE> 9
The number of Annuity Units per payment attributable to a Separate Account
Division to which a transfer(s) is made, determined as of the effective date of
the transfer, will be equal to the number of Annuity Units per payment in the
Division from which the transfer(s) is being made multiplied by the Annuity Unit
Value for that Division, the amount being divided by the Annuity Unit Value for
the Separate Account Division to which transfer is being made.
We reserve the right at any time and without prior notice to any party to
terminate, suspend or modify the transfer privileges described above.
SUPPLEMENTARY ANNUITY AGREEMENT - An Annuity Agreement will be issued to reflect
payments to be made under an Annuity Option. If settlement is a result of
Annuitant's death or the Owner's death, the effective date of the Annuity
Agreement will be the date of receipt of Due Proof of death, as defined above.
Otherwise, the effective date will be the date specified in the Annuity
Agreement.
CHANGE OF ANNUITY DATE - You may elect to change the Annuity Date during the
lifetime of the Annuitant. An election to change the Annuity Date must be in
written form received by us at our Annuity Service Office at least 7 days before
the Annuity Date then reflected on our records.
EVIDENCE OF AGE, SEX AND SURVIVAL - We may require satisfactory evidence of:
(1) the age and sex of any person(s) on whose life the annuity payments are
to be based; and
(2) the continued survival of any person(s) on whose life the annuity
payments are based.
DISBURSEMENT OF FUNDS UPON DEATH OF PAYEE - At the payee's death, unless
otherwise provided in the Annuity Agreement, the commuted value, based on 5.00%
interest of any remaining unpaid guaranteed installments, will be paid in one
sum to the Beneficiary. The value (to be commuted) of the remaining installments
will be determined by using (for all payments) the Annuity Unit Value next
determined after Due Proof of death is received by us.
PROTECTION OF BENEFITS - Unless otherwise provided in the Annuity Agreement, the
payee may not commute, anticipate, assign, alienate or otherwise encumber any
payment to be made.
CREDITORS - Proceeds under this Contract and any payment under any of the above
options will exempt from the claims of creditors and from legal process to the
extent permitted by law.
<PAGE> 10
TABLES OF MONTHLY INSTALLMENTS UNDER OPTION 1
Monthly installments for ages not shown will be furnished on request.
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 10 Years
<TABLE>
<CAPTION>
Adjusted Monthly Installment Adjusted Monthly Installment
Age for each $1,000 of Age for each $1,000 of
Male Female Amount Applied Male Female Amount Applied
- ------------- ------------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
40 46 $4.74 58 64 $5.63
41 47 4.77 59 65 5.70
42 48 4.81 60 66 5.79
43 49 4.84 61 67 5.87
44 50 4.88 62 68 5.96
45 51 4.92 63 69 6.06
46 52 4.96 64 70 6.15
47 53 5.00 65 71 6.26
48 54 5.05 66 72 6.36
49 55 5.09 67 73 6.48
50 56 5.14 68 74 6.59
51 57 5.19 69 75 6.71
52 58 5.24 70 6.84
53 59 5.30 71 6.97
54 60 5.36 72 7.10
55 61 5.42 73 7.23
56 62 5.49 74 7.37
57 63 5.56 75 7.51
- ------------------------------------------------------------------------
</TABLE>
OPTION 1 Life Annuity with Installments Guaranteed
Guaranteed Period - 20 Years
<TABLE>
<CAPTION>
Adjusted Monthly Installment Adjusted Monthly Installment
Age for each $1,000 of Age for each $1,000 of
Male Female Amount Applied Male Female Amount Applied
- ------------- ------------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
40 46 $4.69 58 64 $5.39
41 47 4.72 59 65 5.44
42 48 4.75 60 66 5.49
43 49 4.78 61 67 5.54
44 50 4.81 62 68 5.59
45 51 4.84 63 69 5.65
46 52 4.87 64 70 5.70
47 53 4.91 65 71 5.75
48 54 4.95 66 72 5.81
49 55 4.98 67 73 5.86
50 56 5.02 68 74 5.91
51 57 5.06 69 75 5.96
52 58 5.11 70 6.01
53 59 5.15 71 6.06
54 60 5.19 72 6.10
55 61 5.24 73 6.15
56 62 5.29 74 6.19
57 63 5.34 75 6.22
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 11
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION 2
Monthly installments for ages or combination of ages not
shown will be furnished on request.
OPTION 2 Joint and Survivor Annuity
<TABLE>
<CAPTION>
Adjusted Age
of Other Payee Adjusted Age of Annuitant
- -------------- --------------------------------------------------------------
Male 51 56 58 61 63 66 71
Female 57 62 64 67 69 72 77
- -------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 56 $4.72 $4.80 $4.84 $4.88 $4.91 $4.95 $5.01
55 61 4.81 4.92 4.96 5.03 5.07 5.13 5.23
57 63 4.84 4.97 5.02 5.09 5.14 5.21 5.32
60 66 4.89 5.04 5.10 5.19 5.25 5.34 5.47
62 68 4.93 5.08 5.15 5.25 5.32 5.42 5.58
65 71 4.97 5.15 5.23 5.35 5.43 5.55 5.75
70 76 5.04 5.25 5.35 5.50 5.60 5.77 6.05
- --------------------------------------------------------------------------------
</TABLE>
TABLE OF MONTHLY INSTALLMENTS UNDER OPTION 3
OPTION 3 Income for Specified Period
<TABLE>
<CAPTION>
Monthly Monthly
Specified Installment Specified Installment
Period for each $1,000 of Period for each $1,000 of
(Years) Amount Applied (Years) Amount Applied
- ----------- ------------------- ---------- --------------------
<S> <C> <C> <C>
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
</TABLE>
<PAGE> 12
GENERAL PROVISIONS (Continued)
THE CONTRACT - This Contract and the attached Application are the entire
contract between the parties. All statements made in the Application are, in the
absence of fraud, deemed representations and not warranties. No statement will
void this Contract or be used as a defense to a claim unless it is contained in
the Application.
MODIFICATION OF CONTRACT - Only our President or Secretary may approve a change
or waive the provisions of this Contract. Any change or waiver must be in
writing. No agent has authority to change or waive the provisions of this
Contract.
INCONTESTABILITY - This Contract will not be contestable after it has been in
force for a period of two years from the Issue Date.
MISSTATEMENT OF AGE OR SEX - If a payee's age or sex is misstated, we will
adjust any amount to be paid based upon the corrected age or sex; the date of
the first payment will not be changed. Any underpayment will be paid
immediately. Any overpayment will be deducted from payments subsequently
accruing.
BENEFICIARY - You may designate a Beneficiary to receive any amount payable on
death. The original Beneficiary will be named in the Application. You may change
the Beneficiary by filing a written request with us at our Annuity Service
Office unless an irrevocable Beneficiary designation was previously filed with
us. Any change will take effect when recorded by us. However, any change will
take effect as of the date such request was signed, except as to any payment
made or other action taken by us before the change was recorded.
If there is more than one Beneficiary, the interest of any Beneficiary who
predeceases the Annuitant will pass to the survivor of survivors, share and
share alike, unless otherwise provided in the Beneficiary designation. If no
designated Beneficiary survives the Annuitant, the Beneficiary will be the
Annuitant's estate.
CHANGE OF OWNERSHIP - NOTE: A CHANGE OF OWNERSHIP MAY BE A TAXABLE EVENT, YOU
SHOULD FIRST CONSULT WITH YOUR TAX ADVISOR.
OWNERSHIP - If no designated Beneficiary who is a natural person survives the
Owner, the Owner's estate will become the new Owner.
Ownership may be change at any time during the Annuitant's lifetime. A change
must be made by written notice from the Owner sent to us at our Annuity Service
Office with information sufficient to clearly identify the new Owner to us. No
change will take effect until received by us. Upon being received, any change
will take effect as of the date it was signed, except for action taken by us
before the change was received. We reserve the right to require this Contract
for endorsement of a change.
ASSIGNMENT - No assignment of this Contract is binding until received by us at
our Annuity Service Office. We assume no responsibility for the validity of any
assignment.
NOTE: AN ASSIGNMENT MAY CONSTITUTE A TAXABLE EVENT. YOU SHOULD FIRST CONSULT
WITH YOUR TAX ADVISOR.
Any claim under an assignment is subject to proof of the extent of interest. If
this Contract is assigned, your rights and the Beneficiary's rights are subject
to the rights of any assignee of record.
OWNERSHIP OF THE SEPARATE ACCOUNT ASSETS - We have exclusive ownership and
control of all assets in the Separate Account.
LIABILITIES OF SEPARATE ACCOUNTS - The assets held in the Separate Account will
not be charged with liabilities arising out of any other business we may
conduct. The assets are held and applied exclusively for the benefit of Owners,
Annuitants, Beneficiaries or payees of the Variable Annuity Contracts.
NONPARTICIPATION IN SURPLUS - This Contract does not share in our profits or
surplus.
DELAY OF PAYMENTS - We may defer making any payments for up to six months.
SUSPENSION OF PAYMENTS - We may suspend or postpone payments if any of the
following occur;
(1) during any period when the New York Stock Exchange is closed (other
than customary weekend and holiday closings);
<PAGE> 13
(2) when trading in the markets the Account or a portfolio normally
utilizes is restricted, or an emergency exists as determined by the
Securities and Exchange Commission so that disposal of the Account's or
a Portfolio's investment or determination of Accumulation Unit Value is
not reasonably practicable; or
(3) for such other periods as the Securities and Exchange Commission by
order may permit for protection of the Contract Owners.
REPORTS - Once each Contract Year, we will furnish you with an Annual Report of
the Separate Account and a statement showing the Contract Value.
ADDITION, SUBSTITUTION AND CONVERSION - We reserve the right to add additional
Eligible Portfolios from time to time. If additional Eligible Portfolios are
added, we will notify you in writing. If shares of a Portfolio are not available
for purchase or if, in our judgment, further investment in the shares is no
longer appropriate in view of the purposes of the Separate Account, shares of or
interests in another investment portfolio or company may be substituted for
Portfolio shares held or to be purchased by future Purchase Payments or
transfers under this Contract.
Further, if we deem it to be in the best interests of the Owners, the Separate
Account may be operated as a management company under the Investment Company Act
of 1940 or it may be deregistered under the Act in the event such registration
is no longer required or advisable. In the event any such substitution or change
occurs, we will promptly notify the Owners.
CHANGES IN THE LAW - If laws governing this Contract or the taxation of benefits
under this Contract change, we will amend this Contract to comply with these
changes.
<PAGE> 14
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
NONPARTICIPATING
NO DIVIDENDS
ANCHOR NATIONAL
Life Insurance Company
11601 Wilshire Boulevard Anchor National
Los Angeles, California 90025 a SunAmerica Company
<PAGE> 1
EXHIBIT 5
<TABLE>
<S> <C>
Anchor National Life Mailing Address:
Insurance Company P.O. Box 100330
1 SunAmerica Center Pasadena, CA 91189-0330 [LOGO] Anchor National
Los Angeles, CA 90067-6022 a SunAmerica Company
- -----------------------------------------------------------------------------------------------
ICAP II VARIABLE ANNUITY APPLICATION I-5250-NB
Please print or type.
A. OWNER(S) --Mr. --Mrs. --Ms. --Miss --Dr. --Sr. --Jr.
(Joint owner --------------------------------------------------------------------------
must be LAST NAME OR CORP./PLAN/TRUST FIRST NAME MIDDLE INITIAL
owner's --------------------------------------------------------------------------
spouse) STREET ADDRESS CITY STATE ZIP CODE
MO DAY YR --M --F
-------------- ----------- -------------------- ---------------
DATE OF BIRTH SEX SOC.SEC. OR TAX ID NO. PHONE NO.
------------------ ----------------------------------------------------
ANNUITIZATION DATE CUSTOMER ID NO. (FOR ROYAL ALLIANCE CUSTOMERS ONLY)
B. ANNUITANT(S) --Mr. --Mrs. --Ms. --Miss --Dr. --Sr. --Jr.
(Complete only --------------------------------------------------------------------------
if owner and LAST NAME FIRST NAME MIDDLE INITIAL
annuitant are
different.) --------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
MO DAY YR --M --F
------------- ----------- ---------------------- ----------
DATE OF BIRTH SEX SOC.SEC. OR TAX ID NO. PHONE NO.
C. BENEFICIARY --------------------------------------------- -----------------------
FIRST NAME MIDDLE INITIAL LAST NAME RELATIONSHIP
D. PURCHASE -- INITIAL PAYMENT: $__________________________
PAYMENT(s) [Minimum initial payment is $1,000 for nonqualified contracts; $100
for qualified contracts. Payments my be wired or mailed.] Make check
payable to Anchor National Life Insurance Company.
[-- AUTOMATIC PAYMENTS: $______________________
To establish automatic bank draft for future payments, include an
"Automatic payment Authorization" (form G-5233 ) and a voided check.]
E. SPECIAL -- SYSTEMATIC WITHDRAWAL: Check the box at left and include a completed
systematic withdrawal application [form I-5247-SW].
-- "Easivest" AUTOMATIC DOLLAR COST AVERAGING: Check the box at
left and include a completed application for dollar cost averaging
from the ICAP II Money Market Portfolio [form I-5248-MM] or from the
ICAP II General Account [form I-5248-GA].
-- TELEPHONE TRANSFERS: I/we hereby authorize and direct Anchor National
Life to accept telephone instructions from any person who can furnish
proper identification to exchange units from account to account.
Neither Anchor National Life nor any of its affiliates, nor any fund
managed by such affiliates is liable for any losses arising from such
instructions.
F. PLAN -- Nonqualified. If so, is this a 1035 exchange? -- YES -- NO
If yes, please complete a "Notification of Exchange"
[form (G-5226)
-- Qualified. If so, is this a direct transfer? -- YES -- NO
If yes, please complete a "Request for Transfer of
Retirement Account" [form (G-5223]. Please note:
An appropriate retirement plan/prototype must be
established.
-- IRA (Tax year______) -- Corp. plan (Complete section A with
plan name)
-- IRA rollover -- Keogh/HR-10 (Complete section A with
plan name)
-- IRA transfer -- TSA (Contributions begin ___________)
-- SEP -- Terminal funding
I-5250-NB PLEASE COMPLETE AND SIGN REVERSE SIDE.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
ICAP II VARIABLE ANNUITY APPLICATION I-5250NB
- -----------------------------------------------------------------------------------------------
G. ALLOCATION Allocations should be indicated in whole percentages. The total
allocation must equal 100%. If no allocations are indicated, this
application will be pended until allocation instructions are received.
-----% Money Market Portfolio -----% Growth Portfolio
-----% Fixed Income Portfolio -----% Aggressive Growth
Portfolio
-----% Gov't and Qualify Bond Portfolio -----% Natural Resources
Portfolio
-----% High Yield Portfolio -----% Multi-Asset Portfolio
-----% Target '98 Portfolio -----% Aggressive Multi-Asset
Portfolio
-----% Convertible Securities Portfolio -----% General Account
-----% Foreign Securities Portfolio -----% Other
H. REPLACEMENT Will this policy replace or change any existing life
insurance or annuity in this or any other company?
If so, give the name of insurance company and
policy number. -- YES -- NO
----------------------------------- --------------------------------
COMPANY NAME POLICY NUMBER
I. STATEMENT I understand that no agent can make or change any of the provisions in
OF OWNER the policy or waive any of the Company's rights.
AND
ANNUITANT I hereby verify my understanding that all payments and values provided
by the contract, when based on investment experience of a variable
account(s), are variable and not guaranteed as to dollar amount. I
acknowledge receipt of a current ICAP II/Anchor Series Trust Prospectus.
I have read it carefully and understand its contents. I certify that
the number shown on this form is my correct Social Security/Tax ID
number and that I -- am -- am not subject to a backup withholding order
under Section 3406(a)(1)(C) of the Internal Revenue Code.
Signed at ------------------------------- -----------------------
CITY STATE DATE
------------------------- --------------------------------------------
SIGNATURE OF OWNER SIGNATURE OF ANNUITANT (IF OTHER THAN OWNER)
J. STATEMENT The agent hereby certified he/she witnessed the signature(s) in Section
OF AGENT I above and that his/her answer to the question below is true to the best
of his/her knowledge and belief.
Will this policy replace or change any existing
life insurance or annuity in this or any other company? -- YES -- NO
---------------------------------------- ----------------------
SIGNATURE OF AGENT DATE
-------------------------------------------------------------------------
AGENT'S LAST NAME AGENT'S FIRST NAME MIDDLE INITIAL
-------------------------------------------------------------------------
AGENT'S STREET ADDRESS CITY STATE ZIP CODE
--------------------------- --------------------- ------------------
BROKER/DEALER AGENT'S PHONE NO. AGENT ID NO.
Ohio Insurance Fraud Warning: Any person who, with intent to defraud or
knowing that he is facilitating a fraud against an insurer, submits an
application or files a claim containing a false or deceptive statement
is guilty of insurance fraud.
I-5250-NB
</TABLE>
<PAGE> 1
EXHIBIT 6A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
AND ARTICLES OF REDOMESTICATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
We, the undersigned, acting as incorporators for the purpose of
redomesticating Anchor National Life Insurance Company, a California
corporation, which intends to continue its existence, without interruption, as a
corporation organized under the laws of the State of Arizona pursuant to Arizona
Revised Statutes Section 20-231.A, do hereby adopt the following Amended and
Restated Articles of Incorporation and Articles of Redomestication for said
corporation.
ARTICLE I
The name of the corporation shall be Anchor National Life Insurance
Company.
ARTICLE II
The corporation was incorporated in the State of California on April
12, 1965.
ARTICLE III
The existence of the corporation shall be perpetual.
ARTICLE IV
Upon the approval of these Amended and Restated Articles of
Incorporation and Articles of Redomestication by the necessary regulatory
authorities, Anchor National Life Insurance Company shall be and continue to be
possessed of all privileges, franchises and powers to the same extent as if it
had been originally incorporated under the laws of the State of Arizona; and all
privileges, franchises and powers belonging to said corporation, and all
property, real, personal and mixed, and all debts due on whatever account, all
Certificates of Authority, agent appointments, and all chooses in action, shall
be and the same are hereby ratified, approved, confirmed and assured to Anchor
National Life Insurance Company with like effect and to all intents and purposes
as if it had been originally incorporated under the laws of the State of
Arizona. Said corporation shall be given recognition as a domestic corporation
of the State of Arizona from and after April 12, 1965, and as a domestic insurer
of the State of Arizona from and after December 2, 1966, the dates of its
initial incorporation and authorization to transact insurance business under the
laws of the State of California, effective the latter of January 1, 1996 or the
date of filing with the Arizona Corporation Commission.
ARTICLE V
The nature of the business to be transacted and the objects and
purposes for which this corporation is organized include the transaction of any
and all lawful business for which insurance corporations may be incorporated
under the laws of the State of Arizona without limitation, and as said laws may
be amended from time to time, and specifically said corporation shall be
authorized to transact life insurance, disability insurance and annuities, as
defined under Arizona Revised Statutes, Section 20-254, 20-253 and 20-254.01
respectively, together with such other kinds of insurance as the corporation may
from time to time be authorized to transact, and to act as a reinsurer of
business for which it is duly authorized. Consistent with the applicable federal
and state requirements, the Company may issue funding agreements and guaranteed
investment contracts as defined under Arizona Revised Statutes, Section 20-208.
ARTICLE VI
The authorized capital of the corporation shall be $4,000,000, and
shall consist of 4,000 shares of voting common stock with a par value of
$1,000.00 per share. No holders of stock of the corporation shall have any
<PAGE> 2
preferential right to subscription to any shares or securities convertible into
shares of stock of the corporation, nor any right of subscription to any thereof
other than such, if any, as the Board of Directors in its discretion may
determine, and at such price as the Board of Directors in its discretion may
fix; and any shares or convertible securities which the Board of Directors may
determine to offer for subscription to the holders of stock at the time
existing.
Nothing herein contained shall be construed as prohibiting the
corporation from issuing any shares of authorized but unissued common stock for
such consideration as the Board of Directors may determine, provided such
issuance is approved by the shareholders of the corporation by a majority of the
votes entitled to be cast at any annual or special meeting of shareholders
called for that purpose. No such authorized but unissued stock may, however, be
issued to the shareholders of the corporation by way of a stock dividend,
split-up or in any other manner of distribution unless the same ratable stock
dividend, stock split-up or other distribution be declared or made in voting
common stock to the holder of such voting common stock at the time outstanding.
Each holder of common stock shall be entitled to participate share for share in
any cash dividends which may be declared from time to time on the common stock
of the corporation by the Board of Directors and to receive pro rata the net
assets of the corporation on liquidation.
ARTICLE VII
The affairs of the corporation shall be conducted by a Board of
Directors consisting of not less than five (5) nor more than fifteen (15)
directors as fixed by the bylaws, and such officers as said directors may at any
time elect or appoint. No officer or director need be a shareholder of this
corporation. Ten (10) directors shall constitute the initial Board of Directors.
The names and addresses of the persons who are to serve as directors until the
next annual meeting of shareholders or until their successors are elected and
qualified, and of the persons who are to serve as officers until the next annual
meeting of the directors or until their successors are elected and qualify, are:
Board of Directors
Eli Broad, Chairman
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
James Richard Belardi, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Lorin Merrill Fife, III, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Jana Waring Greer, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Susan Louis Harris, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Gary Walden Krat, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
, Director (Vacant)
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Peter McMillian, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Scott Lawrence Robinson, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Jay Steven Wintrob, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
<PAGE> 3
Officers
Victor Edward Akin, Vice President
Eli Broad, President and Chief Executive Officer
James Richard Belardi, Senior Vice President
Lorin Merrill Fife, III, Senior Vice President, General Counsel
and Assistant Secretary
Michael Lee Fowler, Vice President
Nelson Scott Gillis, Vice President and Controller
Jana Waring Greer, Senior Vice President
J. Franklin Grey, Vice President
Susan Louise Harris, Senior Vice President and Secretary
Keith Bernard Jones, Vice President
Gary Walden Krat, Senior Vice President
Michael Lee Lindquist, Vice President
Edward Poli Nolan, Jr., Vice President
Gregory Mark Outcalt, Vice President
Edwin Raquel Reoliquio, Senior Vice President and Actuary
Scott Harris Richland, Vice President and Treasurer
Scott Lawrence Robinson, Senior Vice President
James Warren Rowan, Vice President
Jay Steven Wintrob, Executive Vice President
The directors shall have the power to adopt, amend, alter and repeal
the Bylaws, to manage the corporate affairs and make all rules and regulations
expedient for the management of the affairs of the corporation, to remove any
officer and to fill all vacancies occurring in the Board of Directors and
offices for any cause, and to appoint from their own number an executive
committee and other committees and vest said committees with all the powers
permitted by the Bylaws.
ARTICLE VIII
Subject to the further provisions hereof, the corporation shall
indemnify any and all of its existing and former directors and officers and
their spouses against all expenses incurred by them and each of them, including
but not confined to legal fees, judgments and penalties which may be incurred,
rendered or levied in any legal or administrative action brought against any of
them, for or on account of any action or omission alleged to have been committed
while acting within the scope of employment as a director or officer of the
corporation to the fullest extent allowable pursuant to A.R.S. ss. 10-005, et
al. as my be amended from time to time. Whenever any such person has grounds to
believe that he may incur any such aforementioned expense, he shall promptly
make a full report of the matter to the President and the Secretary of the
Corporation. Thereafter, the Board of Directors of the corporation shall, within
a reasonable time, determine if such person acted, or failed to act, in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. If the
Board of Directors determines that such person acted, or failed to act, in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, then
indemnification shall be mandatory and shall be automatically extended as
specified herein, provided, however, that the corporation shall have the right
to refuse indemnification, wholly or partially, in any instance in which the
person to whom indemnification would otherwise have been applicable shall have
unreasonably refused to permit the corporation, at its own expense and through
counsel of its own choosing, to defend him in the action, or shall have
unreasonable refused to cooperate in the defense of such action.
ARTICLE IX
All directors of the corporation shall be elected at the annual meeting
of the shareholders, which shall be held on the third Thursday of March of each
year or such other date and time as may be determined by the Board of Directors,
unless such day falls on a holiday, in which event the regular annual meeting
shall be held on the next succeeding business day.
ARTICLE X
The principal place of business of the corporation shall be located in
the City of Phoenix, Maricopa County, Arizona, but it may have other places of
business and transact business, and its Board of Directors or shareholders may
meet for the transaction of business, at such other place or places within or
<PAGE> 4
without the State of Arizona which its Board of Directors may designate.
ARTICLE XI
The fiscal year of the corporation shall be the calendar year.
ARTICLE XII
In no event shall the corporation incur indebtedness in excess of the
amount authorized by law.
ARTICLE XIII
The shares of the corporation, when issued, shall be non-assessable,
except to the extent required by the Constitution, specifically, but not in
limitation thereof, as provided by Article XIV, Section 11 of the Constitution
of the State of Arizona and the laws of the State of Arizona.
ARTICLE XIV
The private property of the shareholders, directors and officers of the
corporation shall be forever exempt from debts and obligations of the
corporation.
ARTICLE XV
The Bylaws of the corporation may be repealed, altered amended, or
substitute Bylaws may be adopted, by the directors or the shareholders, in
accordance with the provisions contained in said Bylaws.
ARTICLE XVI
J. Michael Low of 2999 North 44th Street, Suite 250, Phoenix, Arizona,
85018, having been a bona fide resident of Arizona for at least three (3) years,
is hereby appointed the statutory agent of this corporation in the State of
Arizona, upon whom notices and processes, including service of summons, may be
served, and which, when so served shall have lawful personal service on the
corporation. The Board of Directors may revoke this appointment at any time, and
shall fill the vacancy in such position whenever one exists.
ARTICLE XVII
The names and addresses of the incorporators of the corporation are:
J. Michael Low
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
S. David Childers
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Steven R. Henry
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Carrie M. McDonald
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Kathy A. Steadman
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
All individual incorporators are eighteen (18) years of age or older.
All powers, duties and responsibilities of the incorporators shall
cease at the time of delivery of these Amended and Restated Articles of
<PAGE> 5
Incorporation and Articles of Redomestication to the Arizona Corporation
Commission for filing.
IN WITNESS WHEREOF, we hereunto affix our signatures as of the 14th day
of December, 1995.
/s/ J. Michael Low /s/ S. David Childers
- ------------------------------ ---------------------------
J. Michael Low S. David Childers
/s/ Steven R. Henry /s/ Carrie M. McDonald
- ------------------------------ --------------------------
Steven R. Henry Carrie M. McDonald
/s/ Kathy A. Steadman
- ------------------------------
Kathy A. Steadman
Subscribed, sworn to and acknowledged before me this 14th day of
December, 1995.
/s/ Lori Marlow
--------------------------
Notary Public
My Commission Expires:
August 15, 1999
- ----------------------
<PAGE> 6
APPOINTMENT OF STATUTORY AGENT
I, J. Michael Low, being a resident of the State of Arizona for at
least three (3) years preceding this appointment, do hereby accept appointment
as Statutory Agent for Anchor National Life Insurance Company in accordance with
the Arizona Revised Statutes until appointment of a successor Statutory Agent
and removal.
DATED, this 14th day of December, 1995.
/s/ J. Michael Low
------------------------------
J. Michael Low, Esq.
Low & Childers, P.C.
<PAGE> 1
EXHIBIT 6B
AMENDED AND RESTATED
BYLAWS
of
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ARTICLE I.
Shareholders.
Section 1. Annual Meetings. The annual meeting of the shareholders of
the Corporation shall be held on the fourth Thursday in April of each year or
such other dates and times as may be determined. Not less than ten (10) nor more
than fifty (50) days' written or printed notice stating the place, day and hour
of each annual meeting shall be given in the manner provided in Section 1 of
Article IX hereof. The business to be transacted at the annual meeting shall
include the election of directors, consideration and action upon the reports of
officers and directors and any other business within the power of the
Corporation. All annual meetings shall be general meetings.
Section 2. Special Meetings Called by President or Board of Directors.
At any time in the interval between annual meetings, special meetings of
shareholders may be called by the President, the Secretary or by two (2) or more
directors, upon ten (10) days' written or printed notice, stating the place, day
and hour of such meeting and the business proposed to be transacted thereat.
Such notice shall be given in the manner provided in Section 1 of Article IX. No
business shall be transacted at any special meeting except that named in the
notice.
Section 3. Special Meeting Called by Shareholders. Upon the request in
writing delivered to the President or Secretary of the Corporation by the
holders of ten percent (10%) or more of all shares outstanding and entitled to
vote, it shall be the duty of the President or Secretary of the Corporation to
call forthwith a special meeting of the shareholders. Such request shall state
the purpose or purposes of such meeting and the matters proposed to be acted on
thereat. The Secretary of the Corporation shall inform such shareholders of the
reasonably estimated cost of preparing and mailing the notice of the meeting. If
upon payment of such costs to the corporation, the person to whom such request
in writing shall have been delivered shall fail to issue a call for such meeting
within ten (10) days after the receipt of such request and payment of costs,
then the shareholders owning ten percent (10%) or more of the voting shares may
do so upon giving fifteen (15) days' notice of the time, place and object of the
meeting in the manner provided in Section 1 of Article IX.
Section 4. Removal of Directors. At any special meeting of the
shareholders called in the manner provided for by this Article, the
shareholders, by a vote of a majority of all shares of stock outstanding and
entitled to vote, may remove any director or the entire Board of Directors from
office and may elect a successor or successors to fill any resulting vacancies
for the remainder of his or their terms.
Section 5. Voting; Proxies; Record Date. At all meetings of
shareholders any shareholder entitled to vote may vote by proxy. Such proxy
shall be in writing and signed by the shareholder or by his duly authorized
attorney in fact. It shall be dated, but need not be sealed, witnessed or
acknowledged. The Board of Directors may fix the record date for the
determination of shareholders entitled to vote in the manner provided in Section
4 of Article IX hereof.
Section 6. Quorum. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares of any meeting shall constitute
a quorum for the transaction of business. If at any annual or special meeting of
shareholders a quorum shall fail to attend in person or by proxy, a majority in
interest attending in person or by proxy may adjourn the meeting from time to
time, not exceeding thirty (30) days in all, and thereupon any business may be
transacted which might have been transacted at the meeting originally called had
the same been held at the time so called.
Section 7. Filing Proxies. At all meetings of shareholders, the proxies
shall be filed with and be verified by the Secretary
<PAGE> 2
of the Corporation or, if the meeting shall so decide, by the Secretary of the
meeting.
Section 8. Place of Meetings. All meetings of shareholders shall be
held at such place, either within or without the State of Arizona, on such date
and at such time as may be determined from time to time by the Board of
Directors (or the Chairman in the absence of a designation by the Board of
Directors).
Section 9. Order of Business. The order of business at all meetings of
shareholders shall be as determined by the Chairman of the meeting.
Section 10. Action Without Meeting. Directors may be elected without a
shareholders' meeting by a consent in writing, setting forth the action so
taken, signed by all persons entitled to vote for the election of directors;
provided, however, that the foregoing shall not limit the power of directors to
fill vacancies in the Board of Directors, and that a director may be elected to
fill a vacancy not filled by the directors by written consent in the manner
provided by the General Corporation Law.
Any other action, which under any provision of the General Corporation
Law, may be taken at a meeting of the shareholders, may be taken without a
meeting, and without notice except as hereinafter set forth, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
All written consents shall be filed with the Secretary of the
Corporation. Any shareholder giving a written consent, or the shareholder's
proxyholders, or a transferee of the shares of a personal representative of the
shareholder or their respective proxyholders, may revoke the consent by a
writing receiving by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the Corporation.
<PAGE> 3
ARTICLE II.
Directors.
Section 1. Powers. The Board of Directors shall have the control and
management of the affairs, business and properties of the Corporation. They
shall have and exercise in the name of the Corporation and on behalf of the
Corporation all the rights and privileges legally exercisable by the
Corporation, except as otherwise provided by law, by the Charter or by these
Bylaws. A director need not be a shareholder or a resident of Arizona.
Section 2. Number; Term of Office; Removal. The number of directors of
the Corporation shall be not less than five (5) nor more than fifteen (15). The
number to be elected at each annual meeting shall be fixed by resolution of the
directors and stated in the notice of the meeting, subject, however, to approval
by the shareholders voting at the meeting. The directors shall hold office for
the term of one year, or until their successors are elected and qualify. A
director may be removed from office as provided in Section 4 of Article I
hereof.
Section 3. Vacancies. If the office of a director becomes vacant, or if
the number of directors is increased, such vacancy may be filled by the Board by
a vote of a majority of directors then in office though not less than a quorum.
The shareholders may, however, at any time during the term of such director,
elect some other person to fill said vacancy and thereupon the election by the
Board shall be superseded and such election by the shareholders shall be deemed
a filling of the vacancy and not a removal and may be made at any special
meeting called for that purpose.
Section 4. Organization Meetings; Regular Meetings. The Board of
Directors shall meet for the election of officers and any other business as soon
as practicable after the adjournment of the annual meeting of the shareholders.
No notice of the organization meeting shall be required if it is held at the
same place and immediately following the annual meeting of the shareholders.
Other regular meetings of the Board of Directors may be held at such intervals
as the Board may from time to time prescribe.
Any action required or permitted to be taken at a meeting of the Board
of Directors or of a committee of the Board may be taken without a meeting, if a
unanimous written consent which sets forth the action is signed by each member
of the Board or committee and filed with the minutes of proceedings of the Board
or committee.
Unless otherwise restricted by the Articles of Incorporation or these
Bylaws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors, or
such committee, as the case may be, by means of telephone conference or similar
communications equipment by means of which are persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 5. Special Meetings. Special meetings of the Board may be
called by the President or by a majority of the directors. At least twenty-four
(24) hours' notice shall be given of all special meetings; with the consent of
the majority of the directors, a shorter notice may be given.
Section 6. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business, but such number may be
decreased and/or increased at any time or from time to time by vote of a
majority of the entire Board to any number not less than two (2) directors or
not less than one-third of the directors, whichever is greater.
Section 7. Place of Meetings. The Board of Directors shall hold its
meetings at such place, either within or without the State of Arizona, and at
such time as may be determined from time to time by the Board of Directors (or
the Chairman in the absence of a determination by the Board of Directors).
Section 8. Rules and Regulations. The Board of Directors may adopt such
rules and regulations for the conduct of its meetings and the management of the
affairs of the Corporation as the Board may deem proper and not inconsistent
with the laws of the State of Arizona or these Bylaws or the Charter.
Section 9. Compensation. The directors, as such, may
<PAGE> 4
receive a stated salary for their services and/or a fixed sum and expenses of
attendance may be allowed for attendance at each regular or special meeting of
the Board of Directors. Such stated salary and/or attendance fee shall be
determined by resolution of the Board unless the shareholders have adopted a
resolution relating thereto, provided that nothing herein contained shall be
construed to preclude a director from serving in any other capacity and
receiving compensation therefor.
Section 10. Chairman of the Board. The Board of Directors shall provide
for a Chairman of the Board from among its members. So long as there shall be a
person so active, he shall preside at all meetings of the Board and at all joint
meetings of officers and directors. In the absence of the Chairman, the Vice
Chairman, if any, or in his absence, the President, shall preside at all
meetings of the Board and all joint meetings of officers and directors.
Section 11. Investment Committee. There shall be an Investment
Committee consisting of the President of the Corporation ex officio and such
members of the Board of Directors and/or officers and employees as the Board may
by resolution prescribe. No investments or loans (other than policy loans or
annuity contract loans) shall be made unless the same be authorized or approved
by the Board of Directors or the Investment Committee. The Investment Committee
shall maintain minutes of its meetings and shall submit regular reports to the
Board of Directors.
Section 12. Executive Committee. The Board of Directors may appoint
from among its members an Executive Committee composed of three (3) or more
directors, and may delegate to such Committee, in the interval between the
meetings of the Board of Directors, any and all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
except the power to declare dividends, issue stock, select directors to fill
vacancies in the membership of the Executive Committee or recommend to
shareholders any action requiring shareholders' approval. The members of such
Committee shall constitute a quorum for the transaction of business at any
meeting and the act of a majority of the members present at any meeting at which
the quorum requirement is satisfied shall be the act of the Board of Directors.
In the absence of any member of the Executive Committee necessary to constitute
a quorum, the members thereof present at any meeting, whether or not they
constitute a quorum, may, with telephonic approval of one of the absent members
of the Executive Committee, appoint a member of the Board of Directors to act in
place of such absent member.
Section 13. Other Committees. The Board of Directors may appoint from
its own members and, where permitted by law, from the Corporation's officers
and/or employees, such standing, temporary, special or ad hoc committees as the
Board may determine, investing such committees with such powers, duties and
functions as the Board may prescribe. All such committees shall include the
President, ex officio.
Section 14. Advisory Board. The Board of Directors may elect an
Advisory Board to serve until the next annual meeting of the Board of Directors
or until their successors are elected and qualify. Such Board shall consist of a
number as determined from time to time by the Board of Directors, and they shall
be advised of the meetings of the Board of Directors and authorized to attend
the meetings and counsel with them, but shall have no vote. The Board of
Directors (and between meeting of the Board of Directors, the Executive
Committee) shall have the authority to increase or decrease the number of
members to the Advisory Board and to elect one or more members to the Advisory
Board to serve until the next meeting of the Board of Directors and until their
successors are elected and qualify, and may provide for the compensation and
other rules and regulations with respect to such Board.
Section 15. Procedures; Meetings. The Committees shall keep minutes of
their proceedings and shall report the same to the Board of Directors at the
meeting next succeeding, and any action by the Committees shall be subject to
revision and alteration by the Board of Directors, provided that no rights of
third persons shall be affected by any such revision or alteration.
ARTICLE III.
Officers.
Section 1. In General. The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a Secretary, a Treasurer, and one or
more Assistant Secretaries and Assistant Treasurers, and
<PAGE> 5
such other officers bearing such titles as may be fixed pursuant to these
Bylaws. The President, Vice Presidents, Secretary, and Treasurer shall be chosen
by the Board of Directors and, except those persons holding contracts for fixed
terms, shall hold office only during the pleasure of the Board or until their
successors are chosen and qualify. The President may from time to time appoint
Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and
other officers bearing such titles and exercising such authority as he may from
time to time deem appropriate, and except those persons holding contracts for
fixed terms, those officers appointed by the President shall hold office only
during his pleasure or until their successors are appointed and qualify. Any two
(2) officers, except those of President, Executive Vice President and Secretary,
may be held by the same persons, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity when such instrument is required
to be executed, acknowledged, or verified by any two (2) or more officers. The
Board of Directors or the President may from time to time appoint other agents
and employees, with such powers and duties as they may deem proper.
Section 2. President. The President shall be Chief Executive Officer of
the Corporation and shall have the general management of the Corporation's
business in all departments. In the absence of the Chairman of the Board, the
President shall preside at all meetings of the Board of Directors and shall call
to order all meetings of shareholders. The President shall perform such other
duties as the Board of Directors may direct.
Section 3. Vice Presidents. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as designated by
the Board of Directors or, if not ranked, the Vice President designated by the
Board of Directors, shall perform all the duties of the President, and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board of Directors or the Bylaws.
Section 4. Treasurer. Unless there shall be a financial Vice President
designated by the Board of Directors as the chief financial officer of the
Corporation, having general supervision over its finances, the Treasurer shall
be the chief financial officer with such authority. He shall also have authority
to attest to the seal of the Corporation and shall perform such other duties as
may be assigned to him by the Board of Directors.
Section 5. Secretary of the Corporation. The Secretary of the
Corporation shall keep the minutes of the meetings of the shareholders and of
the Board of Directors, and shall attend to the giving and serving of all
notices of the Corporation required by law or these Bylaws. The Secretary shall
maintain at all times in the principal office of the Corporation at least one
copy of the Bylaws with all amendments to date, and shall make the same,
together with the minutes of the meetings of the shareholders, the annual
statement of the affairs of the Corporation and any voting trust agreement on
file at the office of the Corporation, available for inspection by any officer,
director, or shareholder during reasonable business hours. The Secretary shall
have authority to attest to the seal of the Corporation and shall perform such
other duties as may be assigned to the Secretary by the Board of Directors.
Section 6. Other Secretaries, Assistant Treasurers and Assistant
Secretaries. Secretaries other than the Secretary of the Corporation, the
Assistant Treasurers and the Assistant Secretaries shall have authority to
attest to the seal of the Corporation and shall perform such other duties as may
from time to time be assigned to them by the Board of Directors or the
President.
Section 7. Substitutes. The Board of Directors may from time to time in
the absence of any one of said officers or, at any other time, designate any
other person or persons on behalf of the Corporation, to sign any contracts,
deeds, notes, or other instruments in the place or stead of any of said
officers, and designate any person to fill any one of said offices, temporarily
or for any particular purpose; and any instruments so signed in accordance with
a resolution of the Board shall be the valid act of this Corporation as fully as
if executed by any regular officer.
ARTICLE IV.
Resignation.
Any director or officer may resign his office at any time.
<PAGE> 6
Such resignation shall be made in writing and shall take effect from the time of
its receipt by the Corporation, unless some time be fixed in the resignation,
and then from that date. The acceptance of a resignation shall not be required
to make it effective.
ARTICLE V.
Indemnification of Directors and Officers.
The Corporation shall indemnify any and all of its existing and former
directors and officers and their spouses against all expenses incurred by them
and each of them, including but not confined to legal fees, judgments and
penalties which may be incurred, rendered or levied in any legal or
administrative action brought against any of then, for or on account of any
action or omission alleged to have been committed while acting within the scope
of employment as director of officer of the Corporation to the fullest extent
allowable pursuant to the Arizona General Corporation Law as may be amended from
time to time. Whenever any such person has grounds to believe that he may incur
any such aforementioned expense, he shall promptly make a full report of the
matter to the President and the Secretary of the Corporation. Thereafter, the
Board of Directors of the Corporation shall, within a reasonable time, determine
if such person acted, or failed to act, in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. If the Board of Directors
determines that such person acted, or failed to act, in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, then indemnification shall
be mandatory and shall be automatically extended as specified herein, provided,
however, that the Corporation shall have the right to refuse indemnification,
wholly or partially, in any instance in which the person to whom indemnification
would otherwise have been applicable shall have unreasonably refused to permit
the Corporation, at its own expense and through counsel of its own choosing, to
defend him in the action, or shall have unreasonably refused to cooperate in the
defense of such action.
ARTICLE VI.
Fiscal Year.
The fiscal year of the Corporation shall be the calendar year.
ARTICLE VII.
Seal.
The seal of the Corporation shall be a circular disc inscribed with the
name of the Corporation, "Anchor National Life Insurance Company" and the word
"Incorporated".
ARTICLE VIII.
Miscellaneous Provisions - Stock.
Section 1. Issue. All certificates of shares of the Corporation shall
be signed by the manual or facsimile signatures of the President or any Vice
President, and countersigned by the Treasurer or Secretary of the Corporation
and sealed with the seal or facsimile seal of the Corporation. Any stock
certificates bearing the facsimile signatures of the officers above named shall
be manually signed by an authorized representative of the Corporation's duly
constituted transfer agent. If an officer whose signature appears on a
certificate ceases to be an officer before the certificate is issued, it may,
nevertheless, be issued with the same effect as if such officer were still in
office.
Section 2. Transfers. No transfers of shares shall be recognized or
binding upon the Corporation until recorded on the transfer books of the
Corporation upon surrender and cancellation of certificates for a like number of
shares. All transfers shall be effected only by the holder of record of such
shares or by his legal representative, or by his attorney thereunto authorized
by power of attorney duly executed. The person in whose name shares
<PAGE> 7
shall stand on the books of the Corporation may be deemed by the Corporation the
owner thereof for all purposes. The Corporation's transfer agent shall maintain
a stock transfer book, shall record therein all stock transfers and shall
forward copies of all transfer sheets at regular prompt intervals to the
Corporation's registrar, if there be one, or, if not, then to the Corporation's
principal office for transcription on the stock registry books.
Section 3. Form of Certificates; Procedure. The Board of Directors
shall have power and authority to determine the form of stock certificates
(except insofar as prescribed by law), and to make all such rules and
regulations as the Board may deem expedient concerning the issue; transfer and
registration of said certificates, and to appoint one or more transfer agents
and/or registrars to countersign and register the same. The transfer agent and
registrar may be the same party.
Section 4. Record Dates for Dividends and Shareholders' Meetings. The
Board of Directors may fix the time, not exceeding twenty (20) days preceding
the date of any meeting of shareholders, any dividend payment date or any date
for the allotment of rights, during which the books of the Corporation shall be
closed against transfers of stock, or the Board of Directors may fix a date not
exceeding forty (40) days preceding the date of any meeting of shareholders, any
dividend payment date or any date for the allotment of rights, as a record date
for the determination of the shareholders entitled to notice of and to vote at
such meeting, or entitled to receive such dividends or rights, as the case may
be, and only shareholders of record on such date shall be entitled to notice of
and to vote at such meeting or to receive such dividends or rights, as the case
may be. In the case of a meeting of shareholders, the record date shall be fixed
not less than ten (10) days prior to the date of the meeting.
Section 5. Lost Certificates. In case any certificate of shares is
lost, mutilated or destroyed, the Board of Directors may issue a new certificate
in place thereof, upon indemnity to the Corporation against loss and upon such
other terms and conditions as the Board of Directors may deem advisable.
ARTICLE IX.
Notice.
Section 1. Notice to Shareholders. Whenever by law or these Bylaws
notice is required to be given to any shareholder, such notice may be given to
each shareholder, whether or not such shareholder is entitled to vote, by
leaving the same with him or at his residence or usual place of business, or by
mailing it, postage prepaid, and addressed to him at his address as it appears
on the books of the Corporation. Such leaving or mailing of notice shall be
deemed the time of giving such notice.
Section 2. Notice to Directors and Officers. Whenever by law of these
Bylaws notice is required to be given to any director or officer, such notice
may be given in any one of the following ways: by personal notice to such
director or officer; by telephone communication with such director or officer
personally; by wire, addressed to such director or officer at his then address
or at his address as it appears on the books of the Corporation; or by
depositing the same in writing in the post office or in a letter box in a
postage paid, sealed wrapper addressed to such director or officer at his then
address or at his address as it appears on the books of the Corporation; and the
time when such notice shall be mailed or consigned to a telegraph company for
delivery shall be deemed to be the time of the giving of such notice.
ARTICLE X.
Voting of Securities in Other Corporations.
Any stock or other voting securities in other corporations, which may
from time to time be held by the Corporation, may be represented and voted at
any meeting of shareholders of such other corporation by the President, any Vice
President, or the Treasurer, or by proxy or proxies appointed by the President,
any Vice President, or the Treasurer, or otherwise pursuant to authorization
thereunto given by a resolution of the Board of Directors.
<PAGE> 8
ARTICLE XI.
Amendments.
These Bylaws may be added to, altered, amended or repealed by a
majority vote of the entire Board of Directors at any regular meeting of the
Board or at any special meeting called for that purpose. Any action of the Board
of Directors in adding to, altering, amending or repealing these Bylaws shall be
reported to the shareholders at the next annual meeting and may be changed or
rescinded by majority vote of all of the stock then outstanding and entitled to
vote, without, however, affecting the validity of any action taken in the
meanwhile in reliance on these Bylaws so added to, altered, amended or repealed
as aforesaid by the Board of Directors. In no event shall the Board of Directors
have any power to amend this Article.
<PAGE> 1
EXHIBIT 8
FUND PARTICIPATION AGREEMENT
AGREEMENT, made on this the 18th day of January 1990, between Anchor
National Life Insurance Company ("Anchor National"), a life insurance company
organized under the laws of the State of California, on behalf of itself and on
behalf of Variable Annuity Account One ("Variable Account"), a separate account
of Anchor National existing pursuant to the California Insurance Code, and
Anchor Series Trust ("Fund"), an open-end management investment company
established pursuant to the laws of the Commonwealth of Massachusetts under a
Declaration of Trust dated August 26, 1983 and amended as of September 1, 1988,
and January 19, 1990, and which is composed of multiple investment series
("Portfolios").
WITNESSETH:
WHEREAS, Anchor National, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts assumptively reinsured pursuant to an Assumption Reinsurance
Agreement with Integrated Resources Life Insurance Company and for the purpose
of funding variable annuity contracts issued by Anchor National (collectively
with other contracts and policies that may be funded through the Fund,
"Contracts") ; and
WHEREAS, the Variable Account is divided into Sub-accounts, under which
the income, gain and losses, whether or not realized, from assets allocated to
each such Sub-account are, in accordance with the applicable Contracts, credited
to or charged against such Sub-account without regard to any income, gains or
losses of other Sub-accounts or separate accounts or of Anchor National; and
WHEREAS, the Variable Account and its Sub-accounts are divided into
various "Divisions" under which the income, gains and losses, whether or not
realized, from assets allocated to each such Division are, in accordance with
the applicable Contracts, credited to or charged against such Division without
regard to any income, gains or losses of other Divisions or separate accounts or
of Anchor National; and
WHEREAS, the Variable Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("Act"); and
WHEREAS, the Fund, a registered, open-end, diversified management
investment company, is divided into various Portfolios, each Portfolio being
subject to separate investment objectives and restrictions which may not be
changed without a majority vote of the shareholders of such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund;
and
<PAGE> 2
WHEREAS, the Fund agrees to make its shares available to serve as
underlying investment media for the various Divisions of the variable Account
with each Portfolio of the Fund serving as the underlying investment medium for
the corresponding Division of the variable Account; and
WHEREAS, Anchor National Financial Services, Inc., SunAmerica
Securities, Inc. and Royal Alliance Associates, Inc. (collectively referred to
as "Distributors"), which serve as the distributors for the Contracts funded in
the variable Account pursuant to agreements with Anchor National on behalf of
itself and the variable Account, are broker-dealers registered as such under the
Securities Exchange Act of 1934 and are members of the National Association of
Securities Dealers, Inc.; and
WHEREAS, the Fund's shares are available for investment by separate
accounts of other insurance companies, which may or may not be affiliated
persons (as that term is defined in the Act) of Anchor National; and
WHEREAS, the Fund has undertaken that its Board of Trustees ("Board")
will monitor the Fund for the existence of material irreconcilable conflicts
that may arise between the Contract owners of separate accounts of insurance
companies that invest in the Fund, for the purpose of identifying and remedying
any such conflict;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, Anchor National (on behalf of itself and the variable Account)
and the Fund hereby agree as follows:
1. The Contracts funded by the Variable Account will provide for
the allocation of net amounts among the various Divisions of the Variable
Account for investment in the shares of the particular Portfolio of the Fund
underlying each Division. The selection of a particular Division is to be made
(and such selection may be changed) in accordance with the terms of the
applicable Contract.
2. No representation is made as to the number or amount of such
Contracts to be sold. Anchor National, pursuant to its agreement with
Distributors, will make reasonable efforts to market those Contracts it
determines from time to time to offer for sale and, although it is not required
to offer for sale new Contracts, will accept payments and otherwise service
existing Contracts funded in the Variable Account.
- 2 -
<PAGE> 3
3. Fund shares to be made available to the respective Divisions
of the Variable Account shall be sold by each of the respective Portfolios of
the Fund and purchased by Anchor National for that Division at the net asset
value next computed after receipt of each order, as established in accordance
with the provisions of the then current prospectus of the Fund. Shares of a
particular Portfolio of the Fund shall be ordered in such quantities and at such
times as determined by Anchor National to be necessary to meet the requirements
of those Contracts having amounts allocated to the Division for which the Fund
Portfolio shares serve as the underlying investment medium. Orders and payments
for shares purchased will be sent promptly to the Fund and will be made payable
in the manner established from time to time by the Fund for the receipt of such
payments. The Fund reserves the right to delay transfer of its shares until the
payment check has cleared. The Fund has the obligation to insure that its shares
are registered at all times under the Securities Act of 1933 ("1933 Act").
4. The Fund will redeem the shares of the various Portfolios when
requested by Anchor National on behalf of the corresponding Division of the
variable Account at the net asset value next computed after receipt of each
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Fund. The Fund will make payment in the manner
established from time to time by the Fund for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than is
permitted by the Act.
5. Transfer of the Fund's shares will be by book entry only. No
stock certificates will be issued to the variable Account. Shares ordered from a
particular Portfolio of the Fund will be recorded in an appropriate title for
the corresponding Division of the Variable Account.
6. The Fund shall furnish notice promptly to Anchor National of
any dividend or distribution payable on its shares. All of such dividends and
distributions as are payable on each of the Portfolio shares in the title for
the corresponding Division of the variable Account shall be automatically
reinvested in additional shares of that Portfolio of the Fund. The Fund shall
notify Anchor National of the number of shares so issued.
7. All expenses incident to the performance by the Fund under
this Agreement shall be paid by the Fund. The Fund shall ensure that all its
shares are registered and authorized for issue in accordance with applicable
federal and state laws prior to their purchase by the Variable Account. Anchor
National shall bear none of the expenses for the cost of registration of the
Fund's shares, preparation of the Fund's prospectuses, proxy materials and
reports, the distribution of such items to
- 3 -
<PAGE> 4
shareholders, the preparation of all statements and notices required by any
federal or state law or any taxes on the issue or transfer of the Fund's shares
subject to this Agreement.
8. Anchor National, either directly or through Distributors,
shall make no representations concerning the Fund's shares other than those
contained in the then current prospectus of the Fund and in printed information
subsequently issued by the Fund as supplemental to such prospectus.
9. Anchor National shall provide pass-through voting privileges
to all variable Contract owners so long as the U.S. Securities and Exchange
Commission continues to interpret the Act to require pass-through voting
privileges for variable contractowners. Anchor National shall be responsible for
assuring that the variable Account calculates voting privileges in a manner
consistent with separate accounts of other insurance companies that are invested
in the Fund, which other insurance companies may or may not be affiliated with
Anchor National (collectively with Anchor National, "Participating Insurers"),
as determined by the Board. Anchor National will vote shares for which it has
not received voting instructions in the same proportion as it votes shares for
which it has received instructions.
10. Anchor National will report to the Board any potential or
existing conflicts of which it is or becomes aware between any of its Contract
owners, or between any of its Contract owners and Contract owners of other
Participating Insurers. Anchor National will be responsible for assisting the
Board in carrying out its responsibilities to identify material conflicts by
providing the Board with all information available to it that is reasonably
necessary for the Board to consider any issues raised, including information as
to a decision by Anchor National to disregard voting instructions of its
Contract owners.
11. The Board's determination of the existence of an
irreconcilable material conflict and its implications shall be made known
promptly by it to Anchor National and other Participating Insurers. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance tax, or securities laws or regulations, or
a public ruling, private letter ruling, or any similar action by insurance, tax,
or securities regulatory authorities; (c) an administrative or judicial decision
in any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity Contract owners and variable life insurance Contract owners
- 4 -
<PAGE> 5
or by Contract owners of different Participating Insurers; or (f) a decision by
a Participating Insurer to disregard the voting instructions of variable
Contract owners.
12. If it is determined by a majority of the Board or a majority
of its disinterested Trustees that a material irreconcilable conflict exists
that affects the interests of Anchor National Contract owners, Anchor National
shall, in cooperation with other Participating Insurers whose Contract owners,
interests are also affected by the conflict, take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which steps could
include: (a) withdrawing the assets allocable to the Variable Account from the
Fund or any Portfolio and reinvesting such assets in a different investment
medium, including another Portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any particular
group (-e._q. annuity Contract owners or life insurance Contract owners) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. Anchor National shall
take such steps at its expense if the conflict affects solely the interests of
the owners of Anchor National Contracts, but shall bear only its equitable
portion of any such expense if the conflict also affects the interests of the
Contract owners of one or more Participating Insurers other than Anchor
National, provided: that this sentence shall not be construed to require the
Fund to bear any portion of such expense. If a material irreconcilable conflict
arises because of Anchor National's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, Anchor National may be required, at Fund's election, to
withdraw the Variable Account's investment in the Fund, and no charge or penalty
will be imposed against the Variable Account as a result of such a withdrawal.
Anchor National agrees to take such remedial action as may be required under
this paragraph (12) with a view only to the interests of its Contract owners.
For purposes of this paragraph (12), a majority of the disinterested members of
the Board shall determine whether or not any proposed action adequately remedies
any irreconcilable conflict, but in no event will Fund be required to establish
a new funding medium for any variable Contract. Anchor National shall not be
required by this paragraph (12) to establish a new funding medium for any
variable Contract if an offer to do so has been declined by vote of a majority
of affected Contract owners.
- 5 -
<PAGE> 6
13. In discharging its responsibilities under paragraphs 9, 10 and
12 hereinabove, Anchor National will cooperate and coordinate, to the extent
necessary, with the Board and with other Participating Insurers. Fund agrees
that it will require, as a condition to participation, that all Participating
Insurers shall have obligations and responsibilities regarding conflicts of
interest corresponding to those that are agreed to herein by Anchor National
pursuant to such paragraphs 9, 10 and 12 and pursuant to this paragraph 13.
14. This Agreement shall terminate:
(a) at the option of Anchor National or the Fund upon 60
days, advance written notice to all other parties to
this Agreement; or
(b) at the option of Anchor National if any of the Fund's
shares are not reasonably available to meet the
requirements of the Contracts funded in the Variable
Account as determined by Anchor National. Prompt
notice of election to terminate shall be furnished by
Anchor National; or
(c) at the option of Anchor National upon institution of
formal proceedings against the Fund by the Securities
and Exchange Commission; or
(d) upon the vote of Contract owners having an interest
in a particular Division of the variable Account to
substitute the shares of another investment company
for the corresponding Fund Portfolio shares in
accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the
underlying investment medium. Anchor National will
give 30 days, prior written notice to the Fund of the
date of any proposed action to replace the Fund's
shares; or
(e) in the event the Fund's shares are not registered,
issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of
such shares as the underlying investment medium of
the Contracts funded in the variable Account. Prompt
notice shall be given by each party to all other
parties in the event that the conditions stated in
subsections (b), (c) or (d) of this Paragraph 14
should occur.
15. Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or
- 6 -
<PAGE> 7
agents of the Fund; resort in satisfaction of such obligations shall be had only
to the assets and property of the Fund and not to the private property of any of
the Fund's trustees, shareholders, officers, employees or agents.
16. This Agreement shall be construed in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Anchor National Life Insurance Company
Attest:
/s/ Susan L. Harris By: /s/ ROBERT P. SALTZMAN
- ------------------- -----------------------------------
Robert P. Saltzman
President & Chief Executive Officer
Variable Annuity Account One
By: Anchor National Life Insurance
Company
Attest:
/s/ Susan L. Harris By: /s/ ROBERT P. SALTZMAN
- ------------------- ----------------------------
Robert P. Saltzman
President & Chief Executive
Officer
Anchor Series Trust
Attest:
/s/ Jennifer Muzzey By: /s/ Gary Gardner
- ------------------- ----------------------------------
Gary Gardner
Vice President
- 7 -
<PAGE> 8
Acknowledged and Agreed:
Anchor National Financial Services, Inc.
By: /s/ Gary Krat CEO
--------------------------------- Dated: March 19, 1991
SunAmerica Securities, Inc.
By: /s/ Gary Krat CEO
--------------------------------- Dated: March 19, 1991
Royal Alliance Associates, Inc.
By: /s/ Gary Krat CEO
--------------------------------- Dated: March 19, 1991
<PAGE> 1
EXHIBIT 9
[ROUTIER AND JOHNSON, P.C. LETTERHEAD]
January 22, 1990
OPINION AND CONSENT OF COUNSEL
Having examined and being familiar with the articles of incorporation
and by-laws of Anchor National Life Insurance Company ("Anchor National"), the
applicable resolutions relating to Variable Separate Account One (the
"Account"), and other pertinent records and documents, it is our opinion that
(i) Anchor National is a duly organized and existing stock life insurance
company under the laws of the State of California and that its principal
business is to be an insurer; (ii) the Account is a duly organized and existing
Separate Account of Anchor National and is registered as a unit investment trust
under the Investment Company Act of 1940 (File No. 811-4296); and (iii) the
variable annuity contracts being registered by this Registration Statement under
the Securities Act of 1933 (File No. 33-32569) will, upon issuance thereof, be
validly authorized and issued.
We hereby consent to the use of our Opinion of Counsel in the
Registration Statement on Form N-4 on behalf of the Account.
ROUTIER AND JOHNSON, P.C.
1725 K Street, N.W.
Washington, D.C. 20006
By: /s/ MARK J. MACKEY
-------------------------
Mark J. Mackey
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus and Statement of Additional
Information constituting part of this Registration Statement on Form N-4 for
Variable Annuity Account One of Anchor National Life Insurance Company, of
our report dated November 7, 1997 relating to the consolidated financial
statements of Anchor National Life Insurance Company, and of our report
dated February 14, 1997 relating to the financial statements of Variable Annuity
Account One of Anchor National Life Insurance Company, which appear in such
Statement of Additional Information. We also consent to the reference to us
under the heading "Independent Accountants" in such Statement of Additional
Information.
PRICE WATERHOUSE LLP
Los Angeles, California
January 26, 1998
<PAGE> 1
EXHIBIT 14
SunAmerica Inc. (a Maryland corporation) owns 100% of SunAmerica Financial, Inc.
(a Georgia corporation); Resources Trust Company (a Colorado corporation, which
owns 100% of Resources Consolidated Inc. (a Colorado corporation); SunAmerica
Life Insurance Company (an Arizona corporation); Imperial Premium Finance, Inc.
(a Delaware corporation); SA Investment Group, Inc. (a California corporation);
SunAmerica Capital Trust I (a Delaware business trust); SunAmerica Capital Trust
II (a Delaware business trust); SunAmerica Capital Trust III (a Delaware
business trust); SunAmerica Capital Trust IV (a Delaware business trust);
SunAmerica Capital Trust V (a Delaware business trust); SunAmerica Capital Trust
VI (a Delaware business trust); SunAmerica Affordable Housing Finance Corp. (a
Delaware corporation); Stanford Ranch, Inc. (a Delaware corporation) which owns
100% of Stanford Ranch, Inc. (a Califoria corporation); Arrowhead SAHP Corp. (a
New Mexico corporation); Bear Run SAHP Corp. (a Delaware corporation); Chelsea
SAHP Corp. (a Florida corporation); Tierra Vista SAHP Corp. (a Florida
corporation); Westwood SAHP Corp. (a New Mexico corporation); Bryton SAHP Corp.
(a Delaware close corporation); Crossings SAHP Corp. (a Delaware close
corporation); Emerald SAHP Corp. (a Delaware close corporation); Forest SAHP
Corp. (a Delaware close corporation); Pleasant SAHP Corp. (a Delaware close
corporation); Westlake SAHP Corp. (a Delaware close corporation); Williamsburg
SAHP Corp. (a Delaware close corporation); and Willow SAHP Corp. (a Delaware
close corporation). In addition, SunAmerica Inc. owns 80% of AMSUN Realty
Holdings (a California corporation); and 33% of New California Life Holdings,
Inc. (a Delaware corporation) which owns 100% of Aurora National Life Assurance
Company (a California corporation).
SunAmerica Financial, Inc. owns 100% of SunAmerica Marketing, Inc. (a Maryland
corporation); SunAmerica Advertising, Inc. (a Georgia corporation); SunAmerica
Investments, Inc. (a Delaware corporation) which owns 100% of Accelerated
Capital Corp. (a Florida corporation); 1401 Sepulveda Corp. (a California
corporation); SunAmerica Louisiana Properties, Inc. (a California corporation);
SunAmerica Real Estate and Office Administration, Inc. (a Delaware corporation);
SunAmerica Affordable Housing Partners, Inc. (a California corporation); Hampden
I & II Corp. (a California corporation); Sunport Holdings, Inc. (a California
corporation) which owns 100% of Sunport Property Co. (a Florida corporation);
SunAmerica Mortgages, Inc. (a Delaware corporation); Sun Princeton II, Inc. (a
California corporation) which owns 100% of Sun Princeton I (a California
corporation); Advantage Capital Corporation (a New York corporation); SunAmerica
Planning, Inc. (a Maryland corporation which owns 100% of SunAmerica Securities,
Inc. (a Delaware corporation) and 100% of Anchor Insurance Services, Inc. (a
Hawaii corporation) which owns 50% of Royal Alliance Associates Inc. (a Delaware
corporation); SunAmerica Insurance Company (Cayman), Ltd. (a Cayman Islands
corporation); Sun Mexico Holdings, Inc. (a Delaware corporation) which owns 100%
of Sun Cancun I, Inc. (a Delaware corporation), Sun Cancun II, Inc. (a Delaware
corporation), Sun Ixtapa I, Inc. (a Delaware corporation) and Sun Ixtapa II,
Inc. (a Delaware corporation); Sun Hechs, Inc. (a California corporation); and
SunAmerica Travel Services, Inc. (a California corporation); SAI Investment
Adviser, Inc. (a Delaware corporation); Sun GP Corp. (a California corporation);
The Financial Group, Inc. (a Georgia Corporation) which owns 100% of Keogler,
Morgan Co., Keogler Investment Advisory, Inc., and Keogler, Morgan investment
Inc. (all Georgia Corporations); Sun CRC, Inc. (a California corporation);
Sun-Dollar, Inc. (a California close corporation); and 70% of Home Systems
Partners (a California limited partnership) which owns 100% of Extraneous
Holdings Corp. (a Delaware corporation).
SunAmerica Life Insurance Company owns 100% of First SunAmerica Life Insurance
Company (a New York corporation); SunAmerica National Life Insurance Company (an
Arizona corporation); John Alden Life Insurance Company of New York (a New York
corporation); CalAmerica Life Insurance Company (a California corporation);
Anchor National Life Insurance Company (a California corporation) which owns
100% of Anchor Pathway Fund, Anchor Series Trust, SunAmerica Series Trust, and
Seasons Series Trust, (all Massachusetts business trusts); UG Corporation (a
Georgia corporation); Export Leasing FSC, Inc. (a U.S. Virgin Islands
corporation); SunAmerica Virginia Properties, Inc. (a California corporation);
SAL Investment Group (a California corporation); and Saamsun Holding Corporation
(a Delaware corporation) which owns 100% of SAM Holdings Corporation (a
California corporation) which owns 100% of SunAmerica Asset Management Corp. (a
Delaware corporation), SunAmerica Capital Services, Inc. (a Delaware
corporation), SunAmerica Fund Services, Inc. (a Delaware corporation), ANF
Property Holdings, Inc. (a California corporation), Capitol Life Mortgage Corp.
(a Delaware corporation) and Sun Royal Holdings Corporation (a California
corporation) which owns 50% of Royal Alliance Associates, Inc. In addition,
SunAmerica Life Insurance Company owns 80% of SunAmerica Realty Partners (a
California corporation) and 33% of New California Life Holdings, Inc. (a
Delaware corporation) which owns 100% of Aurora National Life Assurance Company
(a California corporation; and 88.75% of Sun Quorum L.L.C. (a Delaware limited
liability company).
Imperial Premium Finance, Inc. (Delaware) owns 100% of Imperial Premium Finance,
Inc. (a California corporation); Imperial Premium Funding, Inc. (a Delaware
corporation); and SunAmerica Financial Resources, Inc. (a Delaware corporation).
Updated As of 10/21/97
<PAGE> 1
EXHIBIT 15
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PERSENTS that the undersigned ANCHOR NATIONAL LIFE
INSURANCE COMPANY ("Company"), a stock life insurance company organized under
the laws of the State of California, on behalf of itself and on behalf of
VARIABLE ANNUITY ACCOUNT ONE (C) ("Separate Account"), a separate account of the
Company, and the undersigned directors of the Company hereby constitute and
appoint ROBERT P. SALTZMAN, SUSAN L. HARRIS and LORIN M. FIFE, or any of them,
their true and lawful attorneys and agents, to do any and all acts and things
and to execute any and all instruments that said attorneys and agents may deem
necessary or advisable to enable the Separate Account to comply with any rules,
regulations and requirements of the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended ("1940 Act"), and in connection
with any variable annuity contracts that may be registered under the Securities
Act of 1933, as amended ("1933 Act") and offered in connection with the
Separate Account to comply with any rules, regulations and requirements of the
Securities and Exchange Commission under those Acts or under any other federal
securities laws, including specifically, but without limiting the generality
of the foregoing, power and authority to sign the name of the Company or the
Separate Account, or the names of the Company and the Separate Account, or the
names of the undersigned directors, to any instrument or document filed as a
part of or in connection with or in any way related to (i) the registration of
the Separate Account under the 1940 Act; (ii) any action taken to comply with
any rules, regulations or requirements of the Securities and Exchange
Commission under the 1940 Act or any other federal securities laws; (iii) any
application for and the securing of any exemptions from the 1940 Act or any
other federal securities laws; (iv) the registration of additional variable
annuity contracts under the 1933 Act, if registration is deemed necessary; and
(v) any and all amendments to any registration statement that may be filed in
connection with the variable annuity contracts; each of the undersigned hereby
ratifies and confirms all that said attorneys and agents shall do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed or caused to
be subscribed these presents on the day and date indicated.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(SEAL)
By: /s/ ROBERT P. SALTZMAN
---------------------------------
Robert P. Saltzman, President
ATTEST:
/s/ SUSAN L. HARRIS December 21, 1989
- --------------------------
Secretary
<PAGE> 2
Granting of Power of Attorney
-----------------------------
DIRECTORS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY
/s/ ELI BROAD December 21, 1989
- ------------------------------
Eli Broad
/s/ SAMUEL V. FILOROMO, JR. December 21, 1989
- ------------------------------
Samuel V. Filoromo, Jr.
/s/ NORMAN J. METCALFE December 21, 1989
- ------------------------------
Norman J. Metcalfe
/s/ ALLAN G. RICHMOND December 21, 1989
- ------------------------------
Allan G. Richmond
/s/ SCOTT L. ROBINSON December 21, 1989
- ------------------------------
Scott L. Robinson
/s/ ROBERT P. SALTZMAN December 21, 1989
- ------------------------------
Robert P. Saltzman
ATTORNEY IN FACT
December 21, 1989 /s/ ROBERT P. SALTZMAN
-------------------------------
Robert P. Saltzman
December 21, 1989 /s/ SUSAN L. HARRIS
-------------------------------
Susan L. Harris
December 21, 1989 /s/ LORIN M. FIFE
-------------------------------
Lorin M. Fife
<PAGE> 3
EXHIBIT 15
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned directors of ANCHOR
NATIONAL LIFE INSURANCE COMPANY ("Company"), a stock life insurance company
organized under the laws of the State of California, hereby constitute and
appoint ROBERT P. SALTZMAN, SUSAN L. HARRIS and LORIN M. FIFE, or any of them,
their true and lawful attorneys and agents, to do any and all acts and things
and to execute any and all instruments that said attorneys and agents may deem
necessary or advisable to enable VARIABLE ANNUITY ACCOUNT ONE ("Separate
Account") to comply with any rules, regulations and requirements of the
Securities and Exchange Commission, and in connection with any variable annuity
contracts that may be registered under the Securities Act of 1933, as amended
("1933 Act") and offered in connection with the Separate Account to comply with
any rules, regulations and requirements of the Securities and Exchange
Commission under that Act or under any other federal securities laws, including
specifically, but without limiting the generality of the foregoing, power and
authority to sign the names of the undersigned directors to any instrument or
document filed as a part of or in connection with or in any way related to
(i) any action taken to comply with any rules, regulations or requirements of
the Securities and Exchange Commission under the federal securities laws;
(ii) any application for and the securing of any exemptions from the federal
securities laws; (iii) the registration of additional variable annuity
contracts under the 1933 Act, if registration is deemed necessary; and
(iv) any and all amendments to any registration statement that may be filed in
connection with the variable annuity contracts. Each of the undersigned hereby
ratifies and confirms all that said attorneys and agents shall do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed or caused to
be subscribed these presents on the day and date indicated.
Granting of Power of Attorney
-----------------------------
DIRECTORS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY
/s/ JAMES R. BELARDI June 1, 1990
- ---------------------------------
James R. Belardi
/s/ ANDREW CHUA June 1, 1990
- ---------------------------------
Andrew Chua
/s/ LORIN M. FIFE June 1, 1990
- ---------------------------------
Lorin M. Fife
/s/ SUSAN L. HARRIS June 1, 1990
- ---------------------------------
Susan L. Harris
/s/ JAY S. WINTROB June 1, 1990
- --------------------------------
Jay S. Wintrob
<PAGE> 4
ATTORNEY IN FACT
/s/ ROBERT P. SALTZMAN June 1, 1990
- -----------------------------------
Robert P. Saltzman
/s/ SUSAN L. HARRIS June 1, 1990
- -----------------------------------
Susan L. Harris
/s/ LORIN M. FIFE June 1, 1990
- -----------------------------------
Lorin M. Fife
<PAGE> 5
EXHIBIT 15
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned directors of ANCHOR
NATIONAL LIFE INSURANCE COMPANY ("Company"), a stock life insurance company
organized under the laws of the State of California, hereby constitute and
appoint ROBERT P. SALTZMAN, SUSAN L. HARRIS and LORIN M. FIFE, or any of them,
their true and lawful attorneys and agents, to do any and all acts and things
and to execute any and all instruments that said attorneys and agents may deem
necessary or advisable to enable VARIABLE ANNUITY ACCOUNT ONE (C) ("Separate
Account") to comply with any rules, regulations and requirements of the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended ("1940 Act"), and in connection with any variable annuity contracts that
may be registered under the Securities Act of 1933, as amended ("1933 Act") and
offered in connection with the Separate Account to comply with any rules,
regulations and requirements of the Securities and Exchange Commission under
those Acts or under any other federal securities laws, including specifically,
but without limiting the generality of the foregoing, power and authority to
sign the names of the undersigned directors to any instrument or document filed
as a part of or in connection with or in any way related to (i) the registration
of the Separate Account under the 1940 Act; (ii) any action taken to comply with
any rules, regulations or requirements of the Securities and Exchange Commission
under the 1940 Act or any other federal securities laws; (iii) any application
for and the securing of any exemptions from the 1940 Act or any other federal
securities laws; (iv) the registration of additional variable annuity contracts
under the 1933 Act, if registration is deemed necessary; and (v) any and all
amendments to any registration statement that may be filed in connection with
the variable annuity contracts; each of the undersigned hereby ratifies and
confirms all that said attorneys and agents shall do or cause to be done by
virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed or caused to
be subscribed these presents on the day and date indicated.
Granting of Power of Attorney
-----------------------------
DIRECTORS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY
/s/ JAMES BELARDI June 1, 1990
- --------------------------------
James Belardi
/s/ ANDREW CHUA June 1, 1990
- --------------------------------
Andrew Chua
/s/ LORIN M. FIFE June 1, 1990
- --------------------------------
Lorin M. Fife
<PAGE> 6
Granting of Power of Attorney
-----------------------------
DIRECTORS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY
/s/ SUSAN L. HARRIS June 1, 1990
- --------------------------------
Susan L. Harris
/s/ JAY S. WINTROB June 1, 1990
- --------------------------------
Jay S. Wintrob
ATTORNEY IN FACT
/s/ ROBERT P. SALTZMAN June 1, 1990
- -------------------------------
Robert P. Saltzman
/s/ SUSAN L. HARRIS June 1, 1990
- -------------------------------
Susan L. Harris
/s/ LORIN M. FIFE June 1, 1990
- -------------------------------
Lorin M. Fife
<PAGE> 7
EXHIBIT (15)
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of ANCHOR
NATIONAL LIFE INSURANCE COMPANY ("Company"), a stock life insurance company
organized under the laws of the State of California, hereby constitutes and
appoints ROBERT P. SALTZMAN, SUSAN L. HARRIS and JAY S. WINTROB, or any of
them, his true and lawful attorneys and agents, to do any and all acts and
things and to execute any and all instruments that said attorneys and agents
may deem necessary or advisable to enable VARIABLE ANNUITY ACCOUNT ONE
("Separate Account") to comply with any rules, regulations and requirements of
the Securities and Exchange Commission, and in connection with any variable
annuity contracts that may be registered under the Securities Act of 1933, as
amended ("1933 Act") and offered in connection with the Separate Account to
comply with any rules, regulations and requirements of the Securities and
Exchange Commission under that Act or under any other federal securities laws,
including specifically, but without limiting the generality of the foregoing,
power and authority to sign the name of the undersigned director to any
instrument or document filed as a part of or in connection with or in any way
related to (i) any action taken to comply with any rules, regulations or
requirements of the Securities and Exchange Commission under the federal
securities laws; (ii) any application for and the securing of any exemptions
from the federal securities laws; (iii) the registration of additional variable
annuity contracts under the 1933 Act, if registration is deemed necessary; and
(iv) any and all amendments to any registration statement that may be filed in
connection with the variable annuity contracts. The undersigned hereby ratifies
and confirms all that said attorneys and agents shall do or cause to be done by
virtue thereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney on the date indicated.
Granting of Power of Attorney
-----------------------------
DIRECTORS OF ANCHOR NATIONAL LIFE INSURANCE COMPANY
/s/ NORMAN J. METCALFE January 30, 1992
- --------------------------------
Norman J. Metcalfe
/s/ CLARK P. MANNING, JR. January 30, 1992
- --------------------------------
Clark P. Manning, Jr.
ATTORNEY-IN-FACT
----------------
/s/ ROBERT P. SALTZMAN January 30, 1992
- --------------------------------
Robert P. Saltzman
/s/ SUSAN L. HARRIS January 30, 1992
- --------------------------------
Susan L. Harris
/s/ JAY S. WINTROB January 30, 1992
- --------------------------------
Jay S. Wintrob
