AGL SEPARATE ACCOUNT D, 485BPOS, 2000-03-31

AGL SEPARATE ACCOUNT D
485BPOS, 2000-03-31

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<PAGE>

Registration Nos. 333-40637
811-2441

As filed with the Commission on March 31, 2000
______________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

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

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 80 X
------ ---

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT D
(Exact Name of Registrant)

AMERICAN GENERAL LIFE INSURANCE COMPANY
(Name of Depositor)

2727-A Allen Parkway
Houston, Texas 77019-2191
(Address of Depositor's Principal Executive Offices) (Zip Code)
(713) 831-1230
(Depositor's Telephone Number, including Area Code)

Pauletta P. Cohn, Esq.
Deputy General Counsel
American General Life Companies
2929 Allen Parkway, Houston, Texas 77019
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: Continuous

It is proposed that the filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 3, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(3) of Rule 485.

If appropriate, check the following box:

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

Title of Securities Being Registered:
Units of interest in American General Life Insurance Company
Separate Account D under variable annuity contracts
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

PROFILE OF THE SELECT RESERVE(SM)
FLEXIBLE PAYMENT VARIABLE AND FIXED INDIVIDUAL DEFERRED ANNUITY CONTRACTS

This Profile summarizes information you should know before investing in a
Contract. The Contracts are more fully described in the Prospectus that
accompanies this Profile. Please read the Prospectus carefully.

1. THE CONTRACTS. The Select Reserve(SM) Contracts ("Contracts") are flexible
payment variable and fixed individual deferred annuity Contracts issued by
American General Life Insurance Company ("AGL"). They are primarily designed for
investment of after-tax money in non-qualified annuities in order to provide
retirement income. Because of a minimum initial purchase payment of $50,000, the
Contracts may not be suitable for many tax-qualified plan programs. However, you
may wish to use a Contract for programs such as a rollover individual retirement
annuity.

You may use the Divisions of American General Life Insurance Company Separate
Account D ("Separate Account") for a variable investment return under a
Contract. Variable returns are based on one or more series of the mutual funds
listed in Section 4, below. You may also use AGL's Fixed Account, for
investment in Guarantee Periods with guaranteed principal and interest.

The Divisions of the Separate Account offer an opportunity to realize better
returns than those guaranteed under the Guarantee Periods. The Divisions
involve risk, however, and you can lose money. You may make transfers among the
Divisions and Guarantee Periods.

The Contracts have an accumulation phase and an annuity phase. During the
accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as
income when you make a withdrawal. When you begin receiving regular annuity
payments, a portion of each payment is taxable. Various distribution methods
are available during the accumulation phase and the annuity phase.

The amount accumulated under your Contract during the accumulation phase will
determine the amount of annuity payments during the annuity phase.

2. ANNUITY PAYMENTS. Your Contract's value may be applied to any one of the
following annuity payout options (assuming that you are the annuitant): (1) Life
Annuity - monthly payments during your life; (2) Life Annuity - Period Certain -
monthly payments, during your life, but with payments continuing to the
beneficiary for the balance of the 10, 15 or 20 years (as you choose) if you die
before the end of the chosen period; (3) Joint and Last Survivor-Life - monthly
payments during your life and the life of another payee, with payments
continuing
<PAGE>

during the lifetime of the survivor; (4) Certain Period - monthly payments to
you or another payee and on your death or the death of the other payee to a
beneficiary for a specified period of time between five and 40 years, with no
life contingencies; (5) Specified Dollar Amount - monthly payments in amounts
not less than $125 nor more than $200 per year for each $1,000 of the original
amount due, with the balance to a beneficiary if the person receiving the
payments dies prior to completion of the payments.

With the exception of option 5, you may choose annuity payments under the above
options to be made on a fixed or variable basis. The dollar amount of your
payments on a variable basis will depend upon the investment performance of the
Divisions. Option 5 is available only on a fixed basis. A payee receiving
variable (but not fixed) annuity payments under option 4 may elect at any time
to terminate the option and receive the commuted (current) value of the annuity.

3. PURCHASE. You can purchase a Contract by submitting an application. The
minimum initial purchase payment is $50,000. You may contribute additional
amounts of $5,000 or more at any time during the accumulation phase.

4. INVESTMENT OPTIONS. Through the Divisions, you may invest in one or more of
the following series of the mutual funds named below:

<TABLE>
<CAPTION>
<S> <C> <C>
AMERICAN GENERAL SERIES NAVELLIER VARIABLE INSURANCE ROYCE CAPITAL FUND
PORTFOLIO COMPANY SERIES FUND, INC. . Royce Premier Portfolio
. Money Market Fund . Navellier Growth Portfolio

HOTCHKIS AND WILEY OFFIT VARIABLE WRIGHT MANAGED BLUE
VARIABLE TRUST INSURANCE FUND, INC. CHIP SERIES TRUST
. Hotchkis and Wiley Equity . OFFIT VIF- . Wright International
Income VIP Portfolio Emerging Markets Fund Blue Chip Portfolio
. Hotchkis and Wiley Low . OFFIT VIF- . Wright Selected Blue
Duration VIP Portfolio High Yield Fund Chip Portfolio
. OFFIT VIF-
LEVCO SERIES TRUST Total Return Fund
. LEVCO Equity Value . OFFIT VIF-
Fund U.S. Government
Securities Fund
</TABLE>

You may also invest in a Guarantee Period. Currently, AGL offers a one-year
Guarantee Period. Other Guarantee Periods may be offered, in the future, with
different interest rates and durations.

2
<PAGE>

the OFFIT VIF-Emerging Markets Fund, the OFFIT VIF-High Yield Fund, the OFFIT
VIF-Total Return Fund, and the OFFIT VIF-U.S. Government Securities Fund.

5. EXPENSES. We deduct a daily charge for mortality and expense risks at an
annual rate of 0.36%, and a daily charge for administration expenses at an
annual rate of 0.04%, of the average daily net asset value of a Division.

There also are investment series charges, ranging from 0.57% to 1.85% of the
average annual assets of the series listed in Section 4, above, depending on the
series involved. Charges for state premium and other applicable taxes ("premium
taxes") may also apply at the time you elect to start receiving annuity
payments.

The first two columns in the following chart show the Contract charges and the
investment series charges. The third column, "Total Annual Charges," shows the
total of the charges in the first two columns. The last two columns provide two
examples of the total annual charges, in dollars, that you would pay under a
Contract, assuming that you invest $1,000 in a Contract that earns 5% annually
and that you withdraw your money: (1) at the end of year 1, and (2) at the end
of year 10. The column for year 1 shows the total annual charges for that year.
The column for year 10 shows the aggregate of all the annual charges assessed
for the 10 years. The examples assume that there are no charges for premium
taxes.

<TABLE>
<CAPTION>
EXAMPLES OF
TOTAL ANNUAL TOTAL ANNUAL TOTAL ANNUAL
CONTRACT SERIES TOTAL ANNUAL CHARGES AT END OF:
INVESTMENT SERIES CHARGES CHARGES CHARGES 1 YEAR 10 YEARS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP 0.40% 1.15% 1.55% $16 $185
Hotchkis and Wiley Low Duration VIP 0.40% 0.58% 0.98% $10 $120
LEVCO Equity Value 0.40% 1.10% 1.50% $15 $179
Navellier Growth 0.40% 1.50% 1.90% $19 $222
OFFIT VIF-Emerging Markets 0.40% 1.50% 1.90% $19 $222
OFFIT VIF-High Yield 0.40% 1.15% 1.55% $16 $185
OFFIT VIF-Total Return 0.40% 0.80% 1.20% $12 $145
OFFIT VIF-U.S. Government 0.40% 0.60% 1.00% $10 $122
Securities
Royce Premier 0.40% 1.35% 1.75% $18 $206
Wright International Blue Chip 0.40% 1.85% 2.25% $23 $258
Wright Selected Blue Chip 0.40% 1.15% 1.55% $16 $185
Money Market 0.40% 0.57% 0.97% $10 $119
</TABLE>

The charges reflect any expense reimbursement or waiver. For more information,
see the Fee Table in the Prospectus.

6. TAXES. Usually, you pay taxes on earnings only when distributions are made
from your Contract. You may also pay a 10% penalty on the taxable portion of
distributions received prior to age 59 1/2.

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<PAGE>

7. ACCESS TO YOUR MONEY. Prior to the annuity starting date, you may receive
distributions under your Contract through the following withdrawal options: (1)
partial withdrawals of at least $100 may be taken at any time, and (2)
systematic withdrawals paid monthly, quarterly, semiannually or annually,
subject to a $100 minimum for each payment.

You also have access to your Contract's value by surrendering the Contract. You
may do this at any time prior to the annuity starting date. During the annuity
payout period, a person receiving variable payments, for a designated period of
time, may also surrender the Contract. Withdrawals and surrenders may be
subject to income tax and a tax penalty.

8. PERFORMANCE. During the accumulation phase, your Contract's value in the
Divisions may fluctuate, reflecting the investment performance of the Divisions
you have selected. The following chart shows hypothetical total returns for
Divisions whose corresponding series have at least one full calendar year of
operations. The returns shown are based on the actual historical performance of
the corresponding series. They reflect all charges and deductions of the series
and the Divisions that would have been made during the periods shown. Thus, the
chart reflects all of the charges in the third column of the chart in Section 5,
above, for the Divisions included below. If also included, premium taxes would
reduce the performance numbers shown below. Past performance is not a guarantee
of future results.

<TABLE>
<CAPTION>
Division 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hotchkis and Wiley (3.11)% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Equity Income VIP
Hotchkis and Wiley 2.02% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Low Duration VIP
LEVCO Equity Value 15.26% 15.22% N/A N/A N/A N/A N/A N/A N/A N/A
Navellier Growth 91.89% N/A N/A N/A N/A N/A N/A N/A N/A N/A
OFFIT VIF - 24.52% (16.91)% 5.77% N/A N/A N/A N/A N/A N/A N/A
Emerging Markets
OFFIT VIF-High Yield (1.18)% 3.63% 11.20% N/A N/A N/A N/A N/A N/A N/A
OFFIT VIF-Total Return (2.66)% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Royce Premier 7.79% 8.20% 16.32% N/A N/A N/A N/A N/A N/A N/A
Wright International 31.70% 7.68% 5.06% 16.62% 9.34% N/A N/A N/A N/A N/A
Blue Chip
Wright Selected 13.60% (3.28)% 31.21% 21.99% 25.43% N/A N/A N/A N/A N/A
Blue Chip
Money Market 4.33% 4.47% 4.49% 4.32% 4.85% 3.11% 2.01% 2.57% 4.83% 7.18%
</TABLE>

9. DEATH BENEFIT. If you die before the annuity starting date, the beneficiary
will receive a death benefit. The death benefit is the Contract value at the
time we receive proof of death and a written request specifying the manner of
payment, less premium taxes. However, if death occurs prior to age 81, and
before the annuity starting date, the death benefit is the greater of (1) the
death benefit in the preceding sentence or (2) the sum of all purchase payments
you have paid under the Contract, less any partial withdrawals and premium
taxes.

4
<PAGE>

10. OTHER INFORMATION.

TAX-QUALIFIED PLANS. Please consult your tax adviser before purchasing a
Contract as a rollover from an existing tax-qualified retirement plan, including
another individual retirement account or annuity under Section 408 of the
Internal Revenue Code. Any discussion of taxes in this Profile does not apply to
such a Contract.

FREE LOOK. You can examine your Contract for a period of 10 days after you
receive it, and return it to us for a refund. Your refund will equal your
Contract's value, reflecting any investment gain or loss in the Divisions you
have specified. Some states require us to refund the sum of your purchase
payments if it is larger than your Contract's value. Other states allow us to
refund only the sum of your purchase payments.

AUTOMATIC REBALANCING. You can have your money automatically rebalanced among
the Divisions quarterly, semiannually, or annually in order to retain the
proportional investments you select.

REPORTS. We will mail to Contract owners or annuitants any reports and
communications required by law. The toll-free number for daily Division values
is 1-800-813-5065.

11. INQUIRIES. If you need more information, please contact your registered
representative. You may also contact us at:

American General Life Insurance Company
Annuity Administration Department
P.O. Box 1401
Houston, Texas 77251-1401
Telephone 1-800-813-5065 and 1-713-831-3505

5
<PAGE>

SELECT RESERVE/SM/
FLEXIBLE PAYMENT VARIABLE AND
FIXED INDIVIDUAL DEFERRED ANNUITY CONTRACTS
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-813-5065; 1-713-831-3505

American General Life Insurance Company ("AGL") is offering the flexible payment
variable and fixed individual deferred annuity contracts (the "Contracts")
described in this Prospectus.

You may use American General Life Insurance Company Separate Account D ("the
Separate Account") for a variable investment return under the Contracts based on
one or more series of the mutual funds named below, as follows:

<TABLE>
<CAPTION>
<S> <C> <C>
AMERICAN GENERAL SERIES PORTFOLIO NAVELLIER VARIABLE INSURANCE SERIES FUND, ROYCE CAPITAL FUND
COMPANY INC. . Royce Premier
. Money Market Fund . Navellier Growth Portfolio Portfolio

HOTCHKIS AND WILEY OFFIT VARIABLE INSURANCE FUND, INC. WRIGHT MANAGED BLUE
Variable Trust . OFFIT VIF-Emerging Markets Fund Chip Series Trust
. Hotchkis and Wiley Equity . OFFIT VIF-High Yield Fund . Wright International
Income VIP Portfolio . OFFIT VIF-Total Return Fund Blue Chip Portfolio
. Hotchkis and Wiley Low . OFFIT VIF-U.S. Government . Wright Selected Blue
Duration VIP Portfolio Securities Fund Chip Portfolio

LEVCO SERIES TRUST
. LEVCO Equity Value Fund
</TABLE>

You may also use AGL's guaranteed interest option. This option currently has
one Guarantee Period, with a guaranteed interest rate.

Effective October 20, 1999, the OFFITBANK Variable Insurance Fund, Inc. changed
its name to OFFIT Variable Insurance Fund, Inc. Additionally, the OFFITBANK
VIF-Emerging Markets Fund, the OFFITBANK VIF-High Yield Fund, the OFFITBANK VIF-
Total Return Fund, and the OFFITBANK VIF-U.S. Government Securities Fund,
respectively, changed their names to the OFFIT VIF-Emerging Markets Fund, the
OFFIT VIF-High Yield Fund, the OFFIT VIF-Total Return Fund, and the OFFIT VIF-
U.S. Government Securities Fund.

This Prospectus provides you with information that you should have before
investing in the Contracts. Please read the Prospectus carefully and keep it
for future reference.

For additional information about the Contracts, you may request a copy of the
Statement of Additional Information (the "Statement"), dated April 3, 2000. We
have filed the Statement with the Securities and Exchange Commission ("SEC") and
have incorporated it by reference into this Prospectus. The "Contents" of the
Statement appears at page 47 of this Prospectus. You may obtain a free copy of
the Statement if you write or call AGL's Annuity Administration Department,
which is located at 2727-A Allen Parkway, Houston, Texas 77019-2191. The
telephone number is 1-800-813-5065. You may obtain the Statement through the
SEC's Web site at http://www.sec.gov.

You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense. The Contracts are not available in all states.

This Prospectus is valid only if you also receive current fund prospectuses of
the American General Series Portfolio Company, Hotchkis and Wiley Variable
Trust, Levco Series Trust, Navellier Variable Insurance Series Fund, Inc., OFFIT
Variable Insurance Fund, Inc., Royce Capital Fund, and Wright Managed Blue Chip
Series Trust.

This Prospectus is dated April 3, 2000.
<PAGE>

CONTENTS

<TABLE>
<CAPTION>
<S> <C>
Definitions................................................................................ 4
Fee Table.................................................................................. 7
Communications to Us....................................................................... 9
Performance Information.................................................................... 9
Financial Ratings........................................................................ 10
Other Information........................................................................ 11
Selected Accumulation Unit Data (Unaudited)................................................ 12
Financial Information...................................................................... 12
AGL........................................................................................ 13
Separate Account D......................................................................... 13
The Series................................................................................. 13
Voting Privileges........................................................................ 17
The Fixed Account.......................................................................... 18
Guarantee Periods........................................................................ 18
Crediting Interest....................................................................... 19
New Guarantee Periods.................................................................... 20
Contract Issuance and Purchase Payments.................................................... 20
Minimum Requirements..................................................................... 21
Payments................................................................................. 21
Cancellation............................................................................. 21
Owner Account Value........................................................................ 22
Variable Account Value................................................................... 22
Fixed Account Value...................................................................... 22
Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value... 23
Transfers................................................................................ 23
Automatic Rebalancing.................................................................... 25
Surrenders............................................................................... 25
Partial Withdrawals...................................................................... 26
Annuity Period and Annuity Payment Options................................................. 26
Annuity Commencement Date................................................................ 26
Application of Owner Account Value....................................................... 27
Fixed and Variable Annuity Payments...................................................... 27
Annuity Payment Options.................................................................. 28
Election of Annuity Payment Option....................................................... 28
Available Annuity Payment Options........................................................ 29
Transfers................................................................................ 30
Death Proceeds............................................................................. 31
Death Proceeds Before the Annuity Commencement Date...................................... 31
Death Proceeds After the Annuity Commencement Date....................................... 32
Proof of Death........................................................................... 33
Charges Under the Contracts................................................................ 33
Premium Taxes............................................................................ 33
Transfer Charges......................................................................... 34
Charge to the Separate Account........................................................... 34
Miscellaneous............................................................................ 34
Systematic Withdrawal Plan............................................................... 35
Reduction in Administrative Expense Charge............................................... 35
Other Aspects of the Contracts............................................................. 35
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Owners, Annuitants, and Beneficiaries; Assignments....................................... 35
Reports.................................................................................. 36
Rights Reserved by Us.................................................................... 36
Payment and Deferment.................................................................... 37
Federal Income Tax Matters................................................................. 38
General.................................................................................. 38
Non-Qualified Contracts.................................................................. 38
Individual Retirement Annuities ("IRAs")................................................. 40
Roth IRAs................................................................................ 42
Simplified Employee Pension Plans........................................................ 43
Simple Retirement Accounts............................................................... 43
Other Qualified Plans.................................................................... 43
Private Employer Unfunded Deferred Compensation Plans.................................... 44
Federal Income Tax Withholding and Reporting............................................. 45
Taxes Payable by AGL and the Separate Account............................................ 45
Distribution Arrangements.................................................................. 45
Services Agreements........................................................................ 46
Legal Matters.............................................................................. 46
Year 2000 Considerations................................................................... 46
Other Information on File.................................................................. 47
Contents of Statement of Additional Information............................................ 47
</TABLE>

3
<PAGE>

DEFINITIONS

WE, OUR AND US - American General Life Insurance Company ("AGL").

YOU AND YOUR - a reader of this Prospectus who is contemplating making purchase
payments or taking any other action in connection with a Contract. This is
generally the Owner of a Contract.

ACCOUNT VALUE - the sum of your Fixed Account Value and your Variable Account
Value after deduction of any fees. We may subtract certain other charges from
your Account Value in the case of transfers or distribution of your Account
Value.

ACCUMULATION UNIT - a measuring unit used in calculating your interest in a
Division of the Separate Account before the Annuity Commencement Date.

ANNUITANT - the person named as Annuitant in the application for a Contract and
on whose life annuity payments may be based.

ANNUITY COMMENCEMENT DATE - the date on which we begin making payments under an
Annuity Payment Option, unless you elect a single sum payment instead.

ANNUITY PAYMENT OPTION - one of the ways in which you can request us to make
annuity payments to you. An Annuity Payment Option will control the amount of
each payment, how often we make payments, and for how long we make payments.

ANNUITY PERIOD - the period of time during which we make annuity payments under
an Annuity Payment Option.

ANNUITY UNIT - a measuring unit used to calculate the amount of Variable Annuity
Payments.

BENEFICIARY - the person who will receive any proceeds due under a Contract
following the death of an Owner or an Annuitant.

CODE - the Internal Revenue Code of 1986, as amended.

CONTINGENT ANNUITANT - a person whom you designate under a Non-Qualified
Contract to become the Annuitant if the Annuitant dies before the Annuity
Commencement Date and the Contingent Annuitant is alive when the Annuitant dies.

CONTINGENT BENEFICIARY - a person whom you designate to receive any proceeds due
under a Contract following the death of an Owner or an Annuitant, if the
Beneficiary has died but the Contingent Beneficiary is alive when the proceeds
become payable.

CONTRACT - an individual annuity Contract offered by this Prospectus.

CONTRACT ANNIVERSARY - each anniversary of the date of issue of the Contract.

CONTRACT YEAR - each year beginning with the date of issue of the Contract.

DIVISION - one of the several different investment options into which the
Separate Account is divided. Each Division invests in shares of a Series.

4
<PAGE>

FIXED ACCOUNT - the name of the investment option that allows you to allocate
purchase payments to AGL's General Account.

FIXED ACCOUNT VALUE - the sum of your net purchase payments and transfers in the
Fixed Account, plus accumulated interest, less any partial withdrawals and
transfers you make out of the Fixed Account.

FIXED ANNUITY PAYMENTS - annuity payments that are fixed in amount and do not
vary with the investment experience of any Division of the Separate Account.

GENERAL ACCOUNT - all assets of AGL other than those in the Separate Account or
any other legally segregated separate account established by AGL.

GUARANTEED INTEREST RATE - the rate of interest we credit during any Guarantee
Period, on an effective annual basis.

GUARANTEE PERIOD - the period for which we credit a Guaranteed Interest Rate.

HOME OFFICE - our office at the following address and phone number: American
General Life Insurance Company, 2727-A Allen Parkway, Houston, Texas 77019,
(713) 831-3505.

NON-QUALIFIED - not eligible for the kind of federal income tax treatment that
occurs with retirement plans allowed by Sections 401, 403, 408 or 408A of the
Code.

OWNER - the holder of record of a Contract, except that the employer or trustee
may be the Owner of the Contract in connection with a retirement plan.

QUALIFIED - eligible for the kind of federal income tax treatment that occurs
with retirement plans under sections 401, 403, 408 or 408A of the Code.

SEPARATE ACCOUNT AND SEPARATE ACCOUNT D - the segregated asset account of AGL
named American General Life Insurance Company Separate Account D which invests
purchase payments under the Contracts.

SERIES - an individual portfolio of a mutual fund that you may choose for
investment under the Contracts. Currently, the Series are part of either the
American General Series Portfolio Company, Hotchkis and Wiley Variable Trust,
LEVCO Series Trust, Navellier Variable Insurance Series Fund, Inc., OFFIT
Variable Insurance Fund, Inc., Royce Capital Fund or Wright Managed Blue Chip
Series Trust.

VALUATION DATE - a day when we are open for business. However, a day is not a
Valuation Date, if the Series in which a Division invests does not calculate the
value of its shares on that day.

VALUATION PERIOD - the period that starts at the close of regular trading on the
New York Stock Exchange on a Valuation Date and ends at the close of regular
trading on the New York Stock Exchange on the next Valuation Date.

VARIABLE ACCOUNT VALUE - the sum of your account values in the Separate Account
Divisions. Your account value in a Separate Account Division equals the value
of a Division's Accumulation Unit multiplied by the number of Accumulation Units
you have in that Division.

5
<PAGE>

VARIABLE ANNUITY PAYMENTS - annuity payments that vary in amount based on the
investment earnings and losses of one or more of the Divisions.

WRITTEN - signed, dated, and in a form satisfactory to us and received at our
Home Office. You must use special forms we or your sales representative provide
to elect an Annuity Payment Option.

6
<PAGE>

FEE TABLE

The purpose of this Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under a Contract.
The table reflects expenses of the Separate Account and the Series. We may also
deduct amounts for state premium taxes or similar assessments, where applicable.

<TABLE>
<CAPTION>
PARTICIPANT TRANSACTION CHARGES
- -------------------------------
<S> <C>
Front-End Sales Charge Imposed on Purchases 0%
Surrender Charge 0%
(computed as a percentage of purchase payments surrendered)
Transfer Charge $ 0/1/

ANNUAL CONTRACT FEE....................................................... $ 0
- -------------------

SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily net asset value)
- --------------------------------

Mortality and Expense Risk Charge.................................... 0.36%
Administrative Expense Charge........................................ 0.04%
-----
Total Separate Account Annual Expenses................................ 0.40%
=====
</TABLE>
- ---------------
/1/ This charge is $25 after the 12th transfer during each Contract Year before
the Annuity Commencement Date. Certain exceptions apply.

7
<PAGE>

THE SERIES' ANNUAL EXPENSES/1/ (as a percentage of average daily Variable
Account value)

<TABLE>
<CAPTION>
Management Other
Fees After Expenses Annual Expenses
Expense After Expense After Expense
Reimbursement Reimbursement Reimbursement
and Waiver/3/ and Waiver/3/ and Waiver/3/
------------- ------------- -------------
<S> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP 0.75% 0.40% 1.15%
Hotchkis and Wiley Low Duration VIP 0.46% 0.12% 0.58%
LEVCO Equity Value 0.85% 0.25% 1.10%
Navellier Growth 0.85% 0.65% 1.50%
OFFIT VIF-Emerging Markets 0.32% 1.18% 1.50%
OFFIT VIF-High Yield 0.63% 0.52% 1.15%
OFFIT VIF-Total Return/2/ 0.00% 0.80% 0.80%
OFFIT VIF-U. S. Government Securities 0.07% 0.53% 0.60%
Royce Premier 0.00% 1.35% 1.35%
Wright International Blue Chip 0.00% 1.85% 1.85%
Wright Selected Blue Chip 0.00% 1.15% 1.15%
Money Market 0.50% 0.07% 0.57%
</TABLE>
- -----------

/1/ The Series advisers or managers have entered into administrative services
agreements with AGL. The advisers or managers pay fees to AGL for these
services. The fees do not have a direct relationship to the Series' Annual
Expenses. (See "Services Agreements.")

/2/ OFFIT VIF-Total Return may invest a portion of its assets in shares of
OFFIT VIF-High Yield, OFFIT VIF-Emerging Markets, and OFFIT VIF-U.S. Government
Securities. Shareholders of OFFIT VIF-Total Return will indirectly bear the
expenses of the underlying funds at the rates stated above.

/3/ If expense reimbursements and fee waivers were terminated, management
fees and other expenses would have been as shown in the following table.

<TABLE>
<CAPTION>
Management Other Total Annual
Fees Expenses Expenses
----------- --------- -------------
<S> <C> <C> <C>

Hotchkis and Wiley Equity Income VIP 0.75% 5.01% 5.76%
Hotchkis and Wiley Low Duration VIP 0.46% 3.54% 4.00%
LEVCO Equity Value 1.46% 0.25% 1.71%
Navellier Growth 0.85% 7.38% 8.23%
OFFIT VIF-Emerging Markets 0.90% 1.69% 2.59%
OFFIT VIF-High Yield 0.85% 0.56% 1.41%
OFFIT VIF-Total Return 0.80% 6.53% 7.33%
OFFIT VIF-U. S. Government Securities 0.35% 0.77% 1.12%
Royce Premier 1.00% 4.63% 5.63%
Wright International Blue Chip 0.80% 6.62% 7.42%
Wright Selected Blue Chip 0.65% 1.76% 2.41%
Money Market 0.50% 0.07% 0.57%
</TABLE>

8
<PAGE>

Example Whether or not you surrender or annuitize at the end of the applicable
time period, the following expenses would apply to a $1,000 investment
if you assume a 5% annual return on assets:

If all amounts are allocated
to a Division that invests in
one of the following Series: 1 year 3 years 5 years 10 years
- ----------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP $16 $49 $ 84 $185
Hotchkis and Wiley Low Duration VIP $10 $31 $ 54 $120
LEVCO Equity Value $15 $47 $ 82 $179
Navellier Growth $19 $60 $103 $222
OFFIT VIF-Emerging Markets $19 $60 $103 $222
OFFIT VIF-High Yield $16 $49 $ 84 $185
OFFIT VIF-Total Return $12 $38 $ 66 $145
OFFIT VIF-U. S. Government Securities* $10 $32 N/A N/A
Royce Premier $18 $55 $ 95 $206
Wright International Blue Chip $23 $70 $120 $258
Wright Selected Blue Chip $16 $49 $ 84 $185
Money Market $10 $31 $ 54 $119
</TABLE>
- ----------------

* "N/A" reflects SEC rules that require OFFIT VIF-U.S. Government Securities to
complete the Example for only the one and three year periods.

THE EXAMPLE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual rate of return
is not an estimate or a guarantee of future investment performance. The Example
assumes an estimated Average Account Value of $50,000.

COMMUNICATIONS TO US

You should include, in communications to us, your Contract number, your name,
and, if different, the Annuitant's name. You may direct communications to the
addresses and phone numbers on the first page of this Prospectus.

Unless this Prospectus states differently, we will consider purchase payments or
other communications to be received at our Home Office on the date we actually
receive them, if they are in proper form. However, we will consider purchase
payments to be received on the next Valuation Date if we receive them (1) after
the close of regular trading on the New York Stock Exchange or (2) on a date
that is not a Valuation Date.

PERFORMANCE INFORMATION

From time to time, we may include in advertisements and other sales materials
several types of performance information for the Divisions. This information
may include "average annual total return" and "cumulative total return." The
Hotchkis and Wiley Low Duration VIP Division, OFFIT VIF-High Yield Division and

9
<PAGE>

OFFIT VIF-U.S. Government Securities Division may also advertise "yield." The
Money Market Division may advertise "yield" and "effective yield."

The performance information that we may present is not an estimate or guarantee
of future investment performance and does not represent the actual investment
experience of amounts invested by a particular Owner. Additional information
concerning a Division's performance appears in the Statement.

Total Return and Yield Quotations. Average annual total return and cumulative
total return figures measure the net income of a Division and any realized or
unrealized gains or losses of the underlying investments in the Division, over
the period stated. Average annual total return figures are annualized and
represent the average annual percentage change in the value of an investment in
a Division over the period stated. Cumulative total return figures represent
the cumulative change in value of an investment in a Division for various
periods stated.

Yield is a measure of the net dividend and interest income earned over a
specific one-month or 30-day period (seven-day period for the Money Market
Division), expressed as a percentage of the value of the Division's Accumulation
Units. Yield is an annualized figure, which means that we assume that the
Division generates the same level of net income over a one-year period and
compound that income on a semi-annual basis. We calculate the effective yield
for the Money Market Division similarly, but include the increase due to assumed
compounding. The Money Market Division's effective yield will be slightly
higher than its yield due to this compounding effect.

Average annual total return figures reflect deduction of all recurring charges
and fees applicable under the Contract to all Owner accounts, including the
following:

. the Mortality and Expense Risk Charge, and

. the Administrative Expense Charge.

Division Performance. The investment performance for each Division that invests
in a corresponding Series of the Trust will reflect the investment performance
of that Series for the periods stated. This information appears in the
Statement. For periods before the date the Contracts became available, we
calculate the performance information for a Division on a hypothetical basis. In
so doing, we reflect deductions of current Separate Account fees and charges
under the Contract from the historical performance of the corresponding Series.
We may waive or reimburse certain fees or charges applicable to the Contract.
Such waivers or reimbursements will affect each Division's performance results.

Information about the experience of the investment advisers to the Series of the
Fund appears in the prospectus for the Fund.

FINANCIAL RATINGS

AGL may advertise or report to Owners its ratings as an insurance company by the
A. M. Best Company. Each year, A. M. Best reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect A.M. Best's current opinion of the relative financial strength
and

10
<PAGE>

operating performance of an insurance company in comparison to the norms of
the life/health industry. Best's Ratings range from A++ to F.

AGL may also advertise or report to Owners its ratings as to claims-paying
ability by the Standard & Poor's Corporation. A Standard & Poor's insurance
claims-paying ability rating is an assessment of an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. Standard & Poor's ratings range from AAA to D.

AGL may additionally advertise its ratings as to claims-paying ability by the
Duff & Phelps Credit Rating Co. A Duff & Phelps claims-paying ability rating is
an assessment of a company's insurance claims-paying ability. Duff & Phelps
ratings range from AAA to CCC.

Current ratings from A.M. Best, Standard & Poor's, and Duff & Phelps may be used
from time to time in any advertising about the Contracts, as well as in any
reports that publish the ratings.

The ratings reflect the claims-paying ability and financial strength of AGL.
They are not a rating of investment performance that purchasers of insurance
products funded through separate accounts, such as the Separate Account, have
experienced or are likely to experience in the future.

OTHER INFORMATION

AGL may also advertise endorsements from organizations, individuals or other
parties that recommend AGL or the Contracts. AGL may occasionally include in
advertisements (1) comparisons of currently taxable and tax-deferred investment
programs, based on selected tax brackets, or (2) discussions of alternative
investment vehicles and general economic conditions.

11
<PAGE>

SELECTED ACCUMULATION UNIT DATA (UNAUDITED)

The following table shows the Accumulation Unit value for the Divisions
available with the Contracts on the date purchase payments were first allocated
to each Division. It also shows the Accumulation Unit value and the number of
Accumulation Units outstanding at the end of each calendar year since each
Division began operations.

<TABLE>
<CAPTION>
Accumulation Accumulation Accumulation
Unit Values Accumulation Unit Values Accumulation Units
(Beginning of Unit Values Outstanding Units Outstanding
Divisions Period) 1 at 12/31/98 at 12/31/99 at 12/31/98 12/31/99
- --------------------------------------- ------------ ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP 5.000000 4.673982 4.528395 10,458.649 12,928.543
Hotchkis and Wiley Low Duration VIP 5.000000 5.121855 5.238929 134,280.851 104,698.154
LEVCO Equity Value 5.000000 5.122522 5.904397 12,926.642 34,452.808
Navellier Growth 5.000000 5.356685 10.278854 17,224.179 251,486.055
OFFIT VIF-Emerging Markets 5.000000 4.910106 6.146015 862,692.096 1,067,275.174
OFFIT VIF-High Yield 5.000000 5.282978 5.246421 5,255,659.406 6,124,110.060
OFFIT VIF-Total Return 5.000000 5.068333 4.933614 197,419.407 0.000
OFFIT VIF-
U.S. Government Securities/2/ 5.112243 5.112243 5.066217 0.000 2,135,668.957
Royce Premier 5.000000 4.798086 5.171841 10,977.370 15,110.971
Wright International Blue Chip 5.000000 4.906973 6.457317 259,926.894 142,263.597
Wright Selected Blue Chip 5.000000 4.675727 5.307591 744,426.830 428,798.791
Money Market 5.000000 5.081157 5.301406 10,286.729 130,731.106
</TABLE>
- -----------------

/1/ The dates when the Divisions commenced operations are as follows: the
Hotchkis and Wiley Equity Income VIP, LEVCO Equity Value, Navellier Growth, and
Royce Premier Divisions, May 14, 1998; the Wright International Blue Chip and
Wright Selected Blue Chip Divisions, June 22, 1998; the Hotchkis and Wiley Low
Duration VIP and OFFIT VIF-Total Return Divisions, June 29, 1998; the Money
Market Division, July 30, 1998; the OFFIT VIF-Emerging Markets and OFFIT VIF-
High Yield Divisions, August 18, 1998; the OFFIT VIF-U.S. Government Securities
Division, March 31, 1999.

/2/ The OFFIT VIF-U.S. Government Securities Division originally commenced
operations on August 21, 1998. The Division had no assets allocated to it and
no activity during the period of September 24, 1998 through March 31, 1999. The
unit value for the Division remained unchanged at 5.112243 for the entire period
of no activity and is the value indicated for the beginning of the period. The
unit value was the same when the Division recommenced operations on March 31,
1999 (the date we identify as "Beginning of Period").

FINANCIAL INFORMATION

The financial statements of AGL appear in the Statement. Please see the first
page of this Prospectus for information on how to obtain a copy of the
Statement. You should consider the financial statements of AGL only as bearing
on the ability of AGL to meet its contractual obligations under the Contracts.
The financial statements do not bear on the investment performance of the
Separate Account. (See "Contents of Statement of Additional Information.").

The financial statements of the Select Reserve Divisions of Separate Account D
also appear in the Statement. They provide financial information about the
Select Reserve Divisions which invest in the Series.

12
<PAGE>

AGL

AGL is a stock life insurance company organized under the laws of the State of
Texas, which is a successor in interest to a company originally organized under
the laws of the State of Delaware in 1917. AGL is an indirect, wholly-owned
subsidiary of American General Corporation, a diversified financial services
holding company engaged primarily in the insurance business. American General
Financial Group is the marketing name for American General Corporation and its
subsidiaries. The commitments under the Contracts are AGL's, and American
General Corporation has no legal obligation to back those commitments.

AGL is a member of the Insurance Marketplace Standards Association ("IMSA").
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. AGL's membership in IMSA applies only to AGL and not its
products.

SEPARATE ACCOUNT D

AGL established Separate Account D on November 19, 1973. The Separate Account
has 68 Divisions, 12 of which are available under the Contracts offered by this
Prospectus. The Separate Account is registered with the Securities and Exchange
Commission as a unit investment trust under the 1940 Act.

Each Division of the Separate Account is part of AGL's general business. The
assets of the Separate Account belong to AGL. Under Texas law and the terms of
the Contracts, the assets of the Separate Account will not be chargeable with
liabilities arising out of any other business that AGL may conduct. These
assets will be held exclusively to meet AGL's obligations under variable annuity
Contracts. Furthermore, AGL credits or charges the Separate Account with the
income, gains, and losses from the Separate Account's assets, whether or not
realized, without regard to other income, gains, or losses of AGL.

THE SERIES

The Separate Account has 12 Divisions funding the variable benefits under the
Contracts. These Divisions invest in shares of one or more series of American
General Series Portfolio Company, Hotchkis and Wiley Variable Trust, LEVCO
Series Trust, Navellier Variable Insurance Series Fund, Inc., OFFIT Variable
Insurance Fund, Inc., Royce Capital Fund and Wright Managed Blue Chip Series
Trust (collectively, the "Underlying Funds").

The Underlying Funds offer shares of these Series, without sales charges,
exclusively to insurance company variable annuity and variable life insurance
separate accounts and not directly to the public. The Underlying Funds also
offer shares to variable annuity and variable life insurance separate accounts
of insurers that are not affiliated with AGL.

We do not foresee any disadvantage to you arising out of these arrangements.
Nevertheless, differences in treatment under tax and other laws, as well as
other considerations, could cause the interests of various owners to conflict.

13
<PAGE>

For example, violation of the federal tax laws by one separate account investing
in one of the Underlying Funds could cause the contracts or certificates funded
through another separate account to lose their tax deferred status. Such a
result might require us to take remedial action. A separate account may have to
withdraw its participation in the Underlying Fund, if a material irreconcilable
conflict arises among separate accounts. In that event, the Underlying Fund may
have to liquidate portfolio securities at a loss to pay for a separate account's
redemption of Trust or Fund shares. At the same time, the Boards of Trustees
and the Boards of Directors of the Underlying Funds, and we, will monitor events
for any material irreconcilable conflicts that may possibly arise and determine
what action, if any, to take to remedy or eliminate the conflict.

14
<PAGE>

The Series of the Underlying Funds and their management are as follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY SERIES ADVISER/MANAGER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

American General Series Portfolio Money Market Fund The Variable Annuity Life
Company Insurance Company
- ------------------------------------------------------------------------------------------------------------
Hotchkis and Wiley Variable Trust Hotchkis and Wiley Equity Hotchkis and Wiley, a division of
Income VIP Portfolio Merrill Lynch Asset Management,
Hotchkis and Wiley Low L.P.
Duration VIP Portfolio
- ------------------------------------------------------------------------------------------------------------
LEVCO Series Trust LEVCO Equity Value John A. Levin and Co., Inc.
Fund
- ------------------------------------------------------------------------------------------------------------
Navellier Variable Insurance Series Navellier Growth Navellier & Associates, Inc.
Fund, Inc. Portfolio
- ------------------------------------------------------------------------------------------------------------
OFFIT Variable Insurance Fund, Inc. OFFIT VIF-Emerging OFFITBANK
Markets Fund
OFFIT VIF-High Yield
Fund
OFFIT VIF-Total
Return Fund
OFFIT VIF-U.S.
Government Securities
Fund
- ------------------------------------------------------------------------------------------------------------
Royce Capital Fund Royce Premier Portfolio Royce & Associates, Inc.
- ------------------------------------------------------------------------------------------------------------
Wright Managed Blue Chip Series Trust Wright International Blue Wright Investors' Service, Inc.
Chip Portfolio
Wright Selected Blue Chip
Portfolio
- ------------------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

The following chart sets out the investment objective of each Series. There can
be no assurances that investment objectives will be achieved.

- ------------------------------------------------------------------------------------------------------------------
SERIES INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Money Market Fund Liquidity, protection of capital and current income through investments in short-term
money market instruments. Shares of the Money Market Fund are neither insured nor
guaranteed by the U.S. Government. There is no assurance that this Fund will be able
to maintain a stable net asset value of $1.00 per share.
- ------------------------------------------------------------------------------------------------------------------
Hotchkis and Wiley Seeks current income and long term growth of income, accompanied by growth of capital.
Equity Income VIP Invests primarily in U.S. stocks.
Portfolio
- ------------------------------------------------------------------------------------------------------------------
Hotchkis and Wiley Low Maximize total return, consistent with preservation of capital. Invests in bonds of
Duration VIP Portfolio varying maturities with a portfolio duration of one to three years.
- ------------------------------------------------------------------------------------------------------------------
LEVCO Equity Value Fund Achieve long term growth of capital by emphasizing the preservation of capital and
control of volatility. A research intensive, value oriented stock selection process
is used in constructing a diversified portfolio.
- ------------------------------------------------------------------------------------------------------------------
Navellier Growth Achieve long-term growth of capital primarily through investment in companies with
Portfolio appreciation potential.
- ------------------------------------------------------------------------------------------------------------------
OFFIT VIF-Emerging Provide investors with a competitive total investment return by focusing on current
Markets Fund yield and opportunities for capital appreciation primarily by investing in corporate
and sovereign debt securities of emerging market countries.
- ------------------------------------------------------------------------------------------------------------------
OFFIT VIF-High Yield High current income, with capital appreciation as a secondary objective. Invests
Fund primarily in U.S. corporate fixed income securities which are rated below investment
grade or unrated at the time of investment.
- ------------------------------------------------------------------------------------------------------------------
OFFIT VIF-Total Return Maximize total return from a combination of capital appreciation and current income by
Fund investing in a diversified portfolio of fixed income securities, including U.S.
Government or agencies' obligations, investment grade fixed income, high yield and
fixed income securities and securities of other investment companies. An SEC
exemptive order permits this Fund to purchase shares of any of the existing or any new
Series of the OFFIT Variable Insurance Fund, Inc.
- ------------------------------------------------------------------------------------------------------------------
OFFIT VIF-U.S. Current income consistent with preservation of capital. Invests at least 80% of its
Government Securities assets in U.S. Government obligations.
Fund
- ------------------------------------------------------------------------------------------------------------------
Royce Premier Portfolio Long-term growth of capital and, as a secondary objective, current income. Invests in
a limited number of equity securities of small-cap companies viewed by Royce &
Associates, Inc. as having excellent business strengths and/or prospects for growth,
high internal rates of return and low leverage and which are trading significantly
below its estimate of their current worth.
- ------------------------------------------------------------------------------------------------------------------
Wright International Long-term capital appreciation by investing primarily in equity securities of
Blue Chip Portfolio well-established, non-U.S. companies that meet the advisor's quality standards.
- ------------------------------------------------------------------------------------------------------------------
Wright Selected Blue Long-term capital appreciation and, as a secondary objective, reasonable current
Chip Portfolio income, by investing primarily in equity securities of well-established U.S. companies
that meet the Advisor's quality standards.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

16
<PAGE>

We automatically reinvest any dividends or capital gain distributions that we
receive on shares of the Series held under Contracts. We reinvest at the
Series' net asset value on the date payable. Dividends and distributions will
reduce the net asset value of each share of the corresponding Series and
increase the number of shares outstanding of the Series by an equivalent value.
However, these dividends and distributions do not change your Account Value.

Before selecting any Division, you should carefully read the Underlying Fund
Prospectus. The Prospectus provides more complete information about the Series
in which the Division invests, including investment objectives and policies,
charges and expenses. An Underlying Fund may accompany its Prospectus with a
summary of the Prospectus called a "profile."

You can find information about the investment performance of a Series of the
Underlying Funds and information about the business experience of the investment
advisers to the Series in the Prospectuses. You may obtain additional copies of
a Prospectus by contacting AGL's Home Office at the addresses and phone numbers
on the first page of this Prospectus. When making your request, please specify
the Series of the Underlying Fund in which you are interested.

High yielding fixed-income securities such as those in which the OFFIT VIF-High
Yield, Emerging Markets and Total Return Divisions invest are subject to greater
market fluctuations and risk of loss of income and principal than investments in
lower yielding fixed-income securities. You should carefully read the Underlying
Fund Prospectuses for each Series in which these Divisions invest and consider
your ability to assume the risks of making an investment in these Divisions.

VOTING PRIVILEGES

The following people may give us voting instructions for Series shares held in
the Separate Account Divisions attributable to their Contract:

. You, as the Owner, before the Annuity Commencement Date, and

. The Annuitant or other payee, during the Annuity Period.

We will vote according to such instructions at meetings of shareholders of the
Series.

We will determine who is entitled to give voting instructions and the number of
votes for which they may give directions as of the record date for a meeting.
We will calculate the number of votes in fractions. We will calculate the
number of votes for any Series as follows:

. For each Owner before the Annuity Commencement Date, we will divide
(1) the Owner's Variable Account Value invested in the corresponding
Division by (2) the net asset value of one share of that Series.

. For each Annuitant or payee during the Annuity Period, we will divide
(1) our liability for future Variable Annuity Payments to the Annuitant
or payee by (2) the value of an Annuity Unit. We will calculate our
liability for future Variable Annuity Payments based on the mortality

17
<PAGE>

assumptions and the assumed interest rate that we use in determining the
number of Annuity Units under a Contract and the value of an Annuity
Unit.

We will vote all shares of each Series owned by the Separate Account as follows:

. Shares for which we receive instructions, in accordance with those
instructions, and

. Shares for which we receive no instructions, including any shares we own
on our own behalf, in the same proportion as the shares for which we
receive instructions.

Shares of each Series may be owned by separate accounts of insurance companies
other than us. We understand that each Series will see that all insurance
companies vote shares uniformly.

We believe that our voting instruction procedures comply with current federal
securities law requirements. However, we reserve the right to modify these
procedures to conform with legal requirements and interpretations that are put
in effect or modified from time to time.

THE FIXED ACCOUNT

AMOUNTS IN THE FIXED ACCOUNT OR SUPPORTING FIXED ANNUITY PAYMENTS BECOME PART OF
OUR GENERAL ACCOUNT. WE HAVE NOT REGISTERED INTERESTS IN THE GENERAL ACCOUNT
UNDER THE SECURITIES ACT OF 1933, AND WE HAVE NOT REGISTERED THE GENERAL ACCOUNT
AS AN INVESTMENT COMPANY UNDER THE 1940 ACT BASED ON FEDERAL LAW EXCLUSION AND
EXEMPTION. THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS ADVISED US
THAT IT HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS THAT RELATE TO THE
FIXED ACCOUNT OR FIXED ANNUITY PAYMENTS. AT THE SAME TIME, WE HAVE LEGAL
RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THIS PROSPECTUS.

Our obligations for the Fixed Account are legal obligations of AGL. Our General
Account assets support these obligations. These General Account assets also
support our obligations under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of AGL. Owners have no legal rights in such investments.

GUARANTEE PERIODS

Account Value that the Owner allocates to the Fixed Account earns a Guaranteed
Interest Rate beginning with the date of the allocation. This Guaranteed
Interest Rate continues for the number of years that the Owner selects from
among the Guarantee Periods that we then offer.

At the end of a Guarantee Period, we will allocate your Account Value in that
Guarantee Period, including interest you have earned, to a new Guarantee Period
of the same length. In the alternative, the Owner may submit a Written request
to us to allocate this amount to a different Guarantee Period or Periods or to
one or more of the Divisions of the Separate Account. We must receive this
Written request at least three business days before the end of the Guarantee
Period.

18
<PAGE>

We will contact the Owner regarding the scheduled Annuity Commencement Date, if
the Owner has not provided the necessary Written request and the renewed
Guarantee Period extends beyond the scheduled Annuity Commencement Date.

The first day of the new Guarantee Period (or other reallocation) will be the
day after the end of the prior Guarantee Period. We will notify the Owner in
writing at least 30 days and not more than 60 days before the end of any
Guarantee Period.

If the Owner's Account Value in a Guarantee Period is less than $500, we reserve
the right to transfer, without charge, the balance to the Money Market Division
at the end of that Guarantee Period. However, we will transfer the balance to
another Division selected by the Owner, if we have received Written instructions
to transfer the balance to that Division.

CREDITING INTEREST

We declare the Guaranteed Interest Rates from time to time as market conditions
dictate. We tell an Owner the Guaranteed Interest Rate for a chosen Guarantee
Period at the time we receive a purchase payment, make a transfer, or renew a
Guarantee Period. We may credit a different interest rate from one Guarantee
Period to another Guarantee Period that is of the same length but that began on
a different date. The minimum Guaranteed Interest Rate is an effective annual
rate of 3%.

Proceeds from an exchange, rollover or transfer accrue interest if you allocate
them to the Fixed Account within 60 days following the date of application for a
Contract. We credit interest to such proceeds during the Guarantee Period
chosen. We calculate interest at a rate that is the higher of:

. the current interest rate we use on the date of application for the
Guarantee Period selected; or

. the current interest rate that we use on the date we receive the
proceeds.

Proceeds that we receive more than 60 days after the date the application is
signed receive interest at the rate in effect on the date we receive the
proceeds.

We credit interest to the Fixed Account starting with the date we receive the
proceeds. The interest rate we use remains the same for the duration of the
applicable Guarantee Period.

AGL's management makes the final determination of the Guaranteed Interest Rates
to be declared. AGL cannot predict or assure the level of any future Guaranteed
Interest Rates in excess of the minimum Guaranteed Interest Rate stated in your
Contract.

You may obtain information concerning the Guaranteed Interest Rates that apply
to the various Guarantee Periods at any time from your sales representative or
from the addresses or telephone numbers on the first page of this Prospectus.

19
<PAGE>

NEW GUARANTEE PERIODS

Each allocation or transfer of an amount to a Guarantee Period starts the
running of a new Guarantee Period for that amount. That new Guarantee Period
will earn a Guaranteed Interest Rate that will continue unchanged until the end
of that Period. The Guaranteed Interest Rate will never be less than the
minimum Guaranteed Interest Rate stated in your Contract.

We may offer one or more Guarantee Periods with a required dollar cost averaging
feature. (See "Transfers.") Currently, we make available a one-year Guarantee
Period and no others. However, we reserve the right to change the Guarantee
Periods that we make available at any time, except that we will always make
available a one-year Guarantee Period.

CONTRACT ISSUANCE AND PURCHASE PAYMENTS

The minimum initial purchase payment is $50,000. The minimum subsequent
purchase payment is $5,000. We reserve the right to modify these minimums at our
discretion.

Your application to purchase a Contract must be on a Written application that we
provide and that you sign. AGL and American General Securities Incorporated, as
distributor of the Contracts, may agree on a different medium or format for the
application. The Owner, joint Owner, Annuitant and Contingent Annuitant must
each be no older than 85. When a purchase payment accompanies an application to
purchase a Contract and you have properly completed the application, we will
either:

. process the application, credit the purchase payment, and issue the
Contract, or

. reject the application and return the purchase payment within two
Valuation Dates after receipt of the application at our Home Office.

If you have not completed the application or have not completed it correctly, we
will request additional documents or information within five Valuation Dates
after receipt of the application at our Home Office.

If we have not received a correctly completed application within five Valuation
Dates after receipt of the purchase payment at our Home Office, we will return
the purchase payment immediately. However, you may specifically consent to our
retaining the purchase payment until you complete the application. In that
case, we will credit the initial purchase payment as of the end of the Valuation
Period in which we receive, at our Home Office, the last information required to
process the application.

We will credit subsequent purchase payments as of the end of the Valuation
Period in which we receive them and any required Written identifying information
at our Home Office.

We reserve the right to reject any application or purchase payment for any
reason.

20
<PAGE>

MINIMUM REQUIREMENTS

If your Account Value in any Division falls below $500 because of a partial
withdrawal from the Contract, we reserve the right to transfer, without charge,
the remaining balance in that Division to the Money Market Division.

If your Account Value in any Division falls below $500 because of a transfer to
another Division or to the Fixed Account, we reserve the right to transfer the
remaining balance in that Division, without charge and pro rata, to the
investment option or options to which the transfer was made.

We will waive these minimum requirements for transfers under the dollar cost
averaging and automatic rebalancing programs. (See "Transfers" and "Automatic
Rebalancing.")

If your total Account Value falls below $10,000, we may cancel the Contract.
We consider such a cancellation a full surrender of the Contract. We will
provide you with 60 days advance notice of any cancellation in these
circumstances.

So long as the Account Value does not fall below $10,000, you do not have to
make further purchase payments. You may, however, elect to make subsequent
purchase payments at any time before the Annuity Commencement Date, if the Owner
and Annuitant are still living.

PAYMENTS

You should make checks for subsequent purchase payments payable to American
General Life Insurance Company and forward them directly to our Home Office.
We also accept purchase payments by wire or by exchange from another insurance
company. You may obtain further information about how to make purchase payments
by either of these methods from your sales representative or from us at the
addresses and telephone numbers on the first page of this Prospectus.

You may make purchase payments pursuant to employer-sponsored plans only with
our agreement.

Your purchase payments are allocated to the Divisions of the Separate Account or
the Guarantee Periods of the Fixed Account as of the date we credit the purchase
payments to your Contract. In your application form, you select (in whole
percentages) the amount of each purchase payment that you are allocating to each
Division and Guarantee Period. You can change these allocation percentages at
any time by Written notice to us.

CANCELLATION

You may cancel your Contract by delivering it or mailing it with a Written
cancellation request to our Home Office or to your sales representative, before
the close of business on the 10th day after you receive the Contract.

We will refund to you in most states, the sum of:

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. your Account Value, and

. any additional amount deducted for premium taxes.

Some states require us to refund the sum of your purchase payments only if it is
larger than the amount just described. In all other states, we refund the sum
of your purchase payments.

OWNER ACCOUNT VALUE

Before the Annuity Commencement Date, your Account Value under a Contract is the
sum of your Variable Account Value and Fixed Account Value, as discussed below.

VARIABLE ACCOUNT VALUE

As of any Valuation Date before the Annuity Commencement Date:

. Your Variable Account Value is the sum of your Variable Account Values in
each Division of the Separate Account.

. Your Variable Account Value in a Division is the product of the number of
your Accumulation Units in that Division multiplied by the value of one
such Accumulation Unit as of that Valuation Date.

There is no guaranteed minimum Variable Account Value. To the extent that your
Account Value is allocated to the Separate Account, you bear the entire
investment risk.

We credit Accumulation Units in a Division to you when you allocate purchase
payments or transfer amounts to that Division. Similarly, we redeem
Accumulation Units when you transfer or withdraw amounts from a Division or when
we pay certain charges under the Contract. We determine the value of these
Accumulation Units at the end of the Valuation Date on which we make the credit
or charge.

The value of an Accumulation Unit for a Division on any Valuation Date is equal
to the previous value of that Division's Accumulation Unit multiplied by that
Division's net investment factor for the Valuation Period ending on that
Valuation Date.

The net investment factor for a Division is determined by dividing (1) the net
asset value per share of the Series shares held by the Division, determined at
the end of the current Valuation Period, plus the per share amount of any
dividend or capital gains distribution made for the Series shares held by the
Division during the current Valuation Period, by (2) the net asset value per
share of the Series shares held in the Division determined at the end of the
previous Valuation Period. We then subtract from that result a factor
representing the mortality risk, expense risk and administrative expense charge.

FIXED ACCOUNT VALUE

As of any Valuation Date before the Annuity Commencement Date:

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. Your Fixed Account Value is the sum of your Fixed Account Value in each
Guarantee Period.

. Your Fixed Account Value in any Guarantee Period is equal to the following
amounts, in each case increased by accrued interest at the applicable
Guaranteed Interest Rate: (1) the amount of net purchase payments,
renewals and transferred amounts allocated to the Guarantee Period, less
(2) the amount of any transfers or withdrawals out of the Guarantee
Period, including withdrawals to pay applicable charges.

AGL guarantees the Fixed Account Value. AGL bears the investment risk for
amounts allocated to the Fixed Account, except to the extent that AGL may vary
the Guaranteed Interest Rate for future Guarantee Periods (subject to the
minimum Guaranteed Interest Rate stated in your Contract).

TRANSFER, AUTOMATIC REBALANCING, SURRENDER AND PARTIAL
WITHDRAWAL OF OWNER ACCOUNT VALUE

TRANSFERS

You can transfer your Account Value beginning 30 days after we issue your
Contract and before the Annuity Commencement Date. The following rules apply:

. You may transfer your Account Value at any time among the available
Divisions of the Separate Account and Guarantee Periods. Transfers will be
effective at the end of the Valuation Period in which we receive your
Written transfer request.

. If a transfer causes your Account Value in any Division or Guarantee
Period to fall below $500, we reserve the right to transfer the remaining
balance in that Division or Guarantee Period in the same proportions as
the transfer request.

. Before the Annuity Commencement Date and after the first 30 days following
the date the Contract was issued, you may make up to 12 transfers each
Contract Year without charge. We will charge you $25 for each additional
transfer.

. You may transfer no more than 25% of the Account Value you allocated to a
Guarantee Period at its inception during any Contract Year. This 25%
limitation does not apply to transfers (1) within 15 days before or after
the end of the Guarantee Period in which you held the transferred amounts,
or (2) a renewal at the end of the Guarantee Period to the same Guarantee
Period.

We reserve the right to defer any transfer from the Fixed Account to any
Division for up to 6 months.

You may establish an automatic transfer plan. (We also refer to this plan as a
dollar cost averaging plan.) The rules about transfers, which we describe above,
will apply to this plan. Under this plan, we will automatically transfer
amounts from the Money Market Division or the one-year Guarantee Period (or any
other Guarantee Period that is available at that time) to one or more other
Divisions. By transferring a set amount on a regular schedule instead of
transferring the total amount at one particular

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time, you may reduce the risk of investing in the corresponding Division only
when the price is high. An automatic transfer plan does not guarantee a profit
and it does not protect against a loss if market prices decline. You will
select:

. the amount we are to transfer under the plan;

. the frequency of the transfers - either monthly, quarterly, semi-annually,
or annually; and

. the duration of the plan.

Transfers under any automatic transfer plan will:

. not count towards the 12 free transfers each Contract Year,

. not incur a $25 charge,

. not be subject to the 25% limitation on transfers from a Guarantee Period,
and

. not be subject to the Account Value minimum requirement described above.

You may obtain additional information about how to establish an automatic
transfer plan from your sales representative or from us at the telephone numbers
and addresses on the first page of this Prospectus. You cannot have an
automatic transfer plan in effect at the same time you have Automatic
Rebalancing, described below, in effect.

You can make transfers by telephone if you have completed a Telephone Transfer
Privilege form and given it to us. The form provides certain rules about
telephone transfers which you will have to follow. We will honor telephone
transfer instructions from any person who provides the correct information. So
there is a risk of possible loss to you if an unauthorized person uses this
service in your name. Currently we try to limit the availability of telephone
transfers only to the Owner of the Contract. We are not liable for any acts or
omissions based upon telephone instructions that we reasonably believe to be
genuine. We are not responsible for losses arising from errors in the
communication of transfer instructions.

We have established procedures for accepting telephone transfer instructions,
which include:

. verification of the Contract number;

. verification of the identity of the caller;

. verification of both the Annuitant's and Owner's names; and

. a form of personal identification from the caller.

We will mail to the Owner a written confirmation of the transaction. We might
receive telephone transfer instructions from more than one person on the same
day, or our recording equipment might

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malfunction. It may be impossible for you to make a telephone transfer at the
time you wish. If this occurs, you should submit a Written transfer request.
Also, we will not process the transaction if, due to malfunction or other
circumstances, the recording of your telephone request is incomplete or not
fully comprehensible. The phone number for telephone transfers is 1-800-813-
5065.

We have not designed the Contracts for professional market timing organizations
or other entities using programmed and frequent transfers. We may not
unilaterally terminate or discontinue transfer privileges. However, we reserve
the right to suspend such privileges for a reasonable period.

AUTOMATIC REBALANCING

You may arrange for Automatic Rebalancing among the Separate Account Divisions
if your Contract has an Account Value of $25,000 or more at the time we receive
the application for Automatic Rebalancing. You may apply for Automatic
Rebalancing either at issue or after issue, and you may subsequently discontinue
it.

Under Automatic Rebalancing, we transfer funds among the Separate Account
Divisions to maintain the percentage allocation you have selected for each
Division. At your election, we will make these transfers on a quarterly, semi-
annual or annual basis, measured from the Contract Anniversary date. A Contract
Anniversary date that falls on the 29th, 30th, or 31st of the month will result
in Automatic Rebalancing starting with the 1st of the next month.

Automatic Rebalancing does not permit transfers to or from any Guarantee Period.
Transfers under Automatic Rebalancing will not count towards the 12 free
transfers each Contract Year and will not incur a $25 charge. You cannot have
Automatic Rebalancing in effect at the same time you have an automatic transfer
plan, described above, in effect.

SURRENDERS

At any time before the Annuity Commencement Date and while the Annuitant is
still living, the Owner may make a full surrender from a Contract.

We will pay you the following upon full surrender:

. your Account Value at the end of the Valuation Period in which we receive
a Written surrender request,

. minus any applicable premium tax.

Our current practice is to require that you return the Contract to our Home
Office with any request for a full surrender.

After a full surrender, or if the Owner's Account Value falls to zero, all
rights of the Owner, Annuitant or any other person under the Contract will end.

All collateral assignees of record must consent to any full surrender.

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PARTIAL WITHDRAWALS

Your Written request for a partial withdrawal should specify the Divisions of
the Separate Account, or the Guarantee Periods of the Fixed Account, from which
you wish to make the partial withdrawal. We will take the withdrawal pro rata
from the Divisions and Guarantee Periods, if (1) you do not tell us how to make
the withdrawal, or (2) we cannot make the withdrawal as you requested.

Partial withdrawal requests must be for at least $100 or, if less, all of your
Account Value. If your remaining Account Value in a Division or Guarantee
Period would be less than $500 as a result of the withdrawal (except for the
Money Market Division), we reserve the right to transfer the remaining balance
to the Money Market Division. We will do this without charge.

We will always pay you the amount of your partial withdrawal request (except
that we may deny your request for a partial withdrawal if it would reduce your
Account Value below $10,000). The value of your Accumulation Units and Fixed
Account interests that we redeem will equal the amount of the withdrawal
request, plus any applicable premium tax. You can also tell us to take income
tax from the amount you want withdrawn.

We also make available a systematic withdrawal plan. Under this plan, you may
make automatic partial withdrawals in amounts and at periodic intervals that you
specify. The terms and conditions that apply to other partial withdrawals will
also apply to this plan. You may obtain additional information about how to
establish a systematic withdrawal plan from your sales representative or from us
at the addresses and telephone numbers on the first page of this Prospectus. We
reserve the right to modify or terminate the systematic withdrawal plan at any
time.

The Code imposes a penalty tax on certain premature surrenders or withdrawals.
See the "Federal Income Tax Matters" section for a discussion of this and other
tax implications of total surrenders and systematic and other partial
withdrawals. The section also discusses tax withholding requirements.

All collateral assignees of record must consent to any partial withdrawals.

ANNUITY PERIOD AND ANNUITY PAYMENT OPTIONS

ANNUITY COMMENCEMENT DATE

The Annuity Commencement Date may be any day of any month between the
Annuitant's 50th and 99th birthday. Your Annuity Commencement Date must be at
least ten years after the Contract's issue date. (Pennsylvania has special
limitations that require the Annuity Commencement Date to be no later than age
90, and as early as age 85.) You may select the Annuity Commencement Date in
the Contract application. You may also change a previously selected date any
time before that date by submitting a Written request, subject to our approval.

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See "Federal Income Tax Matters" for a discussion of the penalties that may
result from distributions before the Annuitant's reaching age 59 1/2 under any
Contract or after April 1 of the year following the calendar year in which the
Annuitant reaches age 70 1/2 under certain Qualified Contracts.

APPLICATION OF OWNER ACCOUNT VALUE

We will automatically apply your Variable Account Value in any Division to
provide Variable Annuity Payments based on that Division and your Fixed Account
Value to provide Fixed Annuity Payments. However, we will apply your Account
Value in different proportions, if you give us Written instructions at least 30
days before the Annuity Commencement Date.

We deduct any applicable state and local premium taxes from the amount of
Account Value that we apply to an Annuity Payment Option. Subject to any such
adjustments, we apply your Variable and Fixed Account Values to an Annuity
Payment Option, as discussed below, as of the end of the Valuation Period that
contains the 10th day before the Annuity Commencement Date.

FIXED AND VARIABLE ANNUITY PAYMENTS

We will determine your first monthly Fixed or Variable Annuity Payment using the
annuity tables in the Contract and the amount of your Account Value that is
applied to provide the Fixed or Variable Annuity Payments.

We determine the amount of each monthly Fixed Annuity Payment thereafter based
on the terms of the Annuity Payment Option selected.

We determine the amount of each monthly Variable Annuity Payment thereafter as
follows:

. We convert the Account Value that we apply to provide Variable Annuity
Payments to a number of Annuity Units. We do this by dividing the amount
of the first Variable Annuity Payment by the value of an Annuity Unit of
a Division as of the end of the Valuation Period that includes the 10th
day before the Annuity Commencement Date. This number of Annuity Units
remains constant for any Annuitant.

. We determine the amount of each subsequent Variable Annuity Payment by
multiplying the number of Annuity Units by the value of an Annuity Unit
as of the end of the Valuation Period that contains the 10th day before
the date of each payment.

. If we base the Variable Annuity Payments on more than one Division, we
perform these calculations separately for each Division.

. The value of an Annuity Unit at the end of a Valuation Period is the
value of the Annuity Unit at the end of the previous Valuation Period,
multiplied by the net investment factor (see "Variable Account Value")
for the Valuation Period, with an offset for the 3.5% assumed interest
rate used in the Contract's annuity tables.

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The Contract's annuity tables use a 3.5% assumed interest rate. A Variable
Annuity Payment based on a Division will be greater than the previous month, if
the Division's investment return for the month is at an annual rate greater than
3.5%. Conversely, a Variable Annuity Payment will be less than the previous
month, if the Division's investment return is at an annual rate less than 3.5%.

ANNUITY PAYMENT OPTIONS

Sixty to ninety days before the scheduled Annuity Commencement Date, we will (1)
notify you that the Contract is scheduled to mature, and (2) request that you
select an Annuity Payment Option.

If you have not selected an Annuity Payment Option ten days before the Annuity
Commencement Date, we will proceed as follows:

. we will extend the Annuity Commencement Date to the Annuitant's 99th
birthday, if the scheduled Annuity Commencement Date is any date before
the Annuitant's 99th birthday; or

. we will pay the Account Value, less any applicable charges and premium
taxes, in one sum to you, if the scheduled Annuity Commencement Date is
the Annuitant's 99th birthday.

The procedure just described is different in Pennsylvania because the Annuity
Commencement Date cannot exceed age 90.

In Texas, we will proceed differently if you have not selected an Annuity
Payment Option within ten days before the Annuity Commencement Date. We will
pay you as if you had elected to receive 120 payments under Annuity Payment
Option 2. See the following description of Option 2.

The Code imposes minimum distribution requirements on the Annuity Payment Option
you choose for a Qualified Contract. (See "Federal Income Tax Matters.") We
are not responsible for monitoring or advising Owners whether they are meeting
the minimum distribution requirements, unless we have received a specific
Written request to do so.

ELECTION OF ANNUITY PAYMENT OPTION

You may elect an Annuity Payment Option only if the initial annuity payment
meets the following minimum requirements:

. where you elect only Fixed or Variable Annuity Payments, the initial
payment must be at least $100; or

. where you elect a combination of Variable and Fixed Annuity Payments, the
initial payment must be at least $50 on each basis.

If the initial annuity payment falls below these amounts, we will reduce the
frequency of annuity payments. If the initial payment still falls below these
amounts, we will make a single payment to the

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Annuitant or other properly-designated payee equal to your Account Value. We
will deduct premium tax from such payment, if it is required in your state.

You may elect the annuity option for payments to a Beneficiary, if you or the
Annuitant dies. If you have not made this election, the Beneficiary may do so
within 60 days after the death proceeds become payable. (See "Death Proceeds.")
Thereafter, the Beneficiary will have all the remaining rights and powers under
the Contract and be subject to all of its terms and conditions. We will make
the first annuity payment at the beginning of the second month following the
month in which we approve the settlement request. We will credit Annuity Units
based on Annuity Unit Values at the end of the Valuation Period that contains
the 10th day before the beginning of that second month.

When an Annuity Payment Option becomes effective, you must deliver the Contract
to our Home Office, in exchange for a payment contract providing for the option
elected.

We provide information about the relationship between the Annuitant's gender and
the amount of annuity payments, including any requirements for gender-neutral
annuity rates and in connection with certain employee benefit plans under
"Gender of Annuitant" in the Statement. (See "Contents of Statement of
Additional Information.")

AVAILABLE ANNUITY PAYMENT OPTIONS

Each Annuity Payment Option, except Option 5, is available on both a fixed and
variable basis. Option 5 is available on a fixed basis only.

OPTION 1 - LIFE ANNUITY - We make annuity payments monthly during the lifetime
of the Annuitant. These payments stop with the last payment due before the
death of the Annuitant. We do not guarantee a minimum number of payments under
this arrangement. For example, the Annuitant or other payee might receive only
one annuity payment, if the Annuitant dies before the second annuity payment.

OPTION 2 - LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN - We make
annuity payments monthly during the lifetime of an Annuitant. In addition, we
guarantee that the Beneficiary will receive monthly payments for the remainder
of the period certain, if the Annuitant dies during that period.

OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY - We make annuity payments
monthly during the lifetime of the Annuitant and another payee and during the
lifetime of the survivor of the two. We stop making payments with the last
payment before the death of the survivor. We do not guarantee a minimum number
of payments under this arrangement. For example, the Annuitant or other payee
might receive only one annuity payment if both die before the second annuity
payment. The election of this option is ineffective if either one dies before
the Annuity Commencement Date. In that case, the survivor becomes the sole
Annuitant, and we do not pay death proceeds because of the death of the other
Annuitant.

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OPTION 4 - PAYMENTS FOR A DESIGNATED PERIOD - We make annuity payments monthly
to an Annuitant or other properly designated payee, or at his or her death, to
the Beneficiary, for a selected number of years ranging from five to 40. If
this option is selected on a variable basis, the designated period may not
exceed the life expectancy of the Annuitant or other properly designated payee.

Under the fourth option, we make no mortality guarantee, even though we reduce
Variable Annuity Payments as a result of a charge to the Separate Account that
is partially for mortality risks. (See "Charge to the Separate Account.")

A payee receiving Variable (but not Fixed) Annuity Payments under Option 4 can
elect at any time to commute (terminate) the option and receive the current
value of the annuity option in a single sum. The current value of an annuity
under Option 4 is the value of all remaining annuity payments, assumed to be
level, discounted to present value at an annual rate of 3.5%. We calculate that
value the next time we determine values after receiving your Written request for
payment. The election of a single sum payment under Option 4 is the only way
you may terminate any Annuity Payment Option once annuity payments have started.

OPTION 5 - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - We pay the amount due in equal
monthly installments of a designated dollar amount until the remaining balance
is less than the amount of one installment. The amount of each installment may
not be less than $125 or more than $200 each year per $1,000 of the original
amount due. If the person receiving these payments dies, we continue to make
the remaining payments to the Beneficiary. Payments under this option are
available on a fixed basis only. To determine the remaining balance at the end
of any month, we decrease the balance at the end of the previous month by the
amount of any installment paid during the month. We then apply, to the
remainder, interest at a rate not less than 3.5% compounded annually. If the
remaining balance at any time is less than the amount of one installment, we
will pay the balance as the final payment under the option.

The Code may treat the election of Option 4 or Option 5 in the same manner as a
surrender of the total account. For tax consequences of such treatment, see
"Federal Income Tax Matters." In addition, the Code may not give tax-deferred
treatment to subsequent earnings.

ALTERNATIVE AMOUNT UNDER FIXED LIFE ANNUITY OPTIONS - In the case of Fixed
Annuity Payments under one of the first three Annuity Payment Options described
above, we make a special election available. In that case, the Owner (or the
Beneficiary, if the Owner has not elected a payment option) may elect monthly
payments based on single payment immediate fixed annuity rates we offer at that
time. This provision allows the Annuitant or other properly-designated payee to
receive the fixed annuity purchase rate in effect for new single payment
immediate annuity contracts, if it is more favorable.

In place of monthly payments, you may elect payments on a quarterly, semi-annual
or annual basis. In that case, we determine the amount of each annuity payment
on a basis consistent with that described above for monthly payments.

TRANSFERS

After the Annuity Commencement Date, the Annuitant or other properly-designated
payee may make six transfers every Contract Year among the available Divisions
of the Separate Account or from the

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Divisions to a Fixed Annuity Payment Option. We will assess no charge for the
transfer. We do not permit transfers from a Fixed to a Variable Annuity Payment
Option. If a transfer causes the value in any Division to fall below $500, we
reserve the right to transfer the remaining balance in that Division in the same
proportion as the transfer request. We make transfers effective at the end of
the Valuation Period in which we receive the Written transfer request at our
Home Office. We reserve the right to terminate or restrict transfers at any
time.

DEATH PROCEEDS

DEATH PROCEEDS BEFORE THE ANNUITY COMMENCEMENT DATE

The death proceeds described below are payable to the Beneficiary under the
Contract if any of the following events occurs before the Annuity Commencement
Date:

. the Annuitant dies, and no Contingent Annuitant has been named under a
Non-Qualified Contract;

. the Annuitant dies, and we also receive proof of death of any named
Contingent Annuitant; or

. the Owner (including the first to die in the case of joint Owners) of a
Non-Qualified Contract dies, regardless of whether the deceased Owner was
also the Annuitant. (However, if the Beneficiary is the Owner's surviving
spouse, or the Owner's surviving spouse is a joint Owner, the surviving
spouse may elect to continue the Contract as described later in this
section.)

If the deceased Owner was a joint Owner, we will pay the death proceeds to the
surviving joint Owner. In this case, we will treat the surviving joint Owner as
the Beneficiary, and we will not recognize any other designation of Beneficiary.
However, joint Owners may provide written instructions to pay death proceeds in
a different manner.

Before age 81, the death proceeds will equal the greater of:

. the sum of all net purchase payments made (less any premium taxes we
deducted previously and all prior partial withdrawals); or

. the Owner's Account Value as of the end of the Valuation Period in which
we receive, at our Home Office, proof of death and the Written request as
to the manner of payment.

At age 81 and afterward, the death proceeds will equal the Account Value.

In all cases, we will deduct any applicable premium taxes.

We will pay the death proceeds to the Beneficiary as of the date the proceeds
become payable. Such date is the end of the Valuation Period in which we
receive:

. proof of the Owner's or Annuitant's death, and

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. a Written request from the Beneficiary specifying the manner of payment.

If the Owner has not already done so, the Beneficiary may, within 60 days after
the date the death proceeds become payable, elect to receive the death proceeds
as (1) a single sum or (2) in the form of one of the Annuity Payment Options
provided in the Contract. (See "Annuity Payment Options.") If we do not
receive a request specifying the manner of payment, we will make a single
payment, based on values we determine at that time.

If the Owner (including the first to die if there are joint Owners) under a Non-
Qualified Contract dies before the Annuity Commencement Date, we will distribute
all amounts payable under the Contract in accordance with the following rules:

. We will distribute all amounts:

(a) within five years of the date of death, or

(b) if the Beneficiary elects, as annuity payments, beginning within one
year of the date of death and continuing over a period not extending
beyond the life or life expectancy of the Beneficiary.

. If the Beneficiary is the Owner's surviving spouse, the spouse may elect
to continue the Contract as the new Owner. If the original Owner was the
Annuitant, the surviving spouse may also elect to become the new
Annuitant. This election is also available to the surviving spouse who is
a joint Owner, even if the surviving spouse is not the Beneficiary. In
this case, we will treat the surviving spouse as the Beneficiary, and we
will not recognize any other designation of Beneficiary.

. If the Owner is not a natural person, these distribution requirements
apply at the death of the primary Annuitant, within the meaning of the
Code. Under a parallel section of the Code, similar requirements apply to
retirement plans for which we issue Qualified Contracts.

Failure to satisfy the requirements described in this section may result in
serious adverse tax consequences.

DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE

If the Annuitant dies on or after the Annuity Commencement Date, the amounts
payable to the Beneficiary or other properly designated payee are any continuing
payments under the Annuity Payment Option in effect. (See "Annuity Payment
Options.") In such case, the payee will:

. have all the remaining rights and powers under a Contract, and

. be subject to all the terms and conditions of the Contract.

Also, if the Annuitant dies on or after the Annuity Commencement Date, no
previously named Contingent Annuitant can become the Annuitant.

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If the payee under a Non-Qualified Contract dies after the Annuity Commencement
Date, we will distribute any remaining amounts payable under the terms of the
Annuity Payment Option at least as rapidly as under the method of distribution
in effect when the payee died. If the payee is not a natural person, this
requirement applies upon the death of the primary Annuitant, within the meaning
of the Code.

Under a parallel section of the Code, similar requirements apply to retirement
plans for which we issue Qualified Contracts.

Failure to satisfy the requirements described in this section may result in
serious adverse tax consequences.

PROOF OF DEATH

We accept the following as proof of any person's death:

. a certified death certificate;

. a certified decree of a court of competent jurisdiction as to the finding
of death;

. a written statement by a medical doctor who attended the deceased at the
time of death; or

. any other proof satisfactory to us.

Once we have paid the death proceeds, the Contract terminates, and our
obligations are complete.

CHARGES UNDER THE CONTRACTS

PREMIUM TAXES

When applicable, we will deduct premium taxes imposed by certain states. We may
deduct such amount either at the time the tax is imposed or later. We may
deduct the amount as follows:

. from purchase payment(s) when received;

. from the Owner's Account Value at the time annuity payments begin;

. from the amount of any partial withdrawal; or

. from proceeds payable upon termination of the Contract for any other
reason, including death of the Owner or Annuitant, and surrender of the
Contract.

If premium tax is paid, AGL may reimburse itself for the tax when making the
deduction under the second, third, and fourth items on the list, immediately
above, by multiplying the sum of Purchase Payments being withdrawn by the
applicable premium tax percentage.

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Applicable premium tax rates depend upon the Owner's then-current place of
residence. Applicable rates currently range from 0% to 3.5%. The rates are
subject to change by legislation, administrative interpretations, or judicial
acts. We will not make a profit on this charge.

TRANSFER CHARGES

We describe the charges assessed to pay for the expense of making transfers
under "Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of
Owner Account Value - Transfers" and "Annuity Period and Annuity Payment Options
- - Transfers." These charges are not designed to yield a profit.

CHARGE TO THE SEPARATE ACCOUNT

We deduct from Separate Account assets a daily charge at an annualized rate of
0.40% (which we may change, but which will never exceed 0.66%) of the average
daily net asset value of the Separate Account attributable to the Contracts.
This charge (1) offsets administrative expenses and (2) compensates us for
assuming mortality and expense risks under the Contract. The 0.40% charge
divides into .04% for administrative expenses and 0.36% for assumption of
mortality and expense risk.

We do not expect to earn a profit on that portion of the charge that is for
administrative expenses. However, we do expect to derive a profit from the
portion that is for the assumption of mortality and expense risks. There is no
necessary relationship between the amount of administrative charges deducted for
a given Contract and the amount of expenses actually attributable to that
Contract.

In assuming the mortality risk, we incur the risks that:

. our actuarial estimate of mortality rates may prove erroneous,

. Annuitants will live longer than expected, and

. more Owners or Annuitants than expected will die at a time when the death
benefit we guarantee is higher than the net surrender value of their
interests in the Contracts.

In assuming the expense risk, we incur the risk that the revenues from the
expense charges under the Contracts (charges that we guarantee will not
increase) will not cover our expense of administering the Contracts.

MISCELLANEOUS

Each Series pays charges and expenses out of its assets. The prospectus for
each Series describes the charges and expenses.

We reserve the right to impose charges or establish reserves for any federal or
local taxes that we incur today or may incur in the future and that we deem
attributable to the Contracts.

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<PAGE>

SYSTEMATIC WITHDRAWAL PLAN

You may make automatic partial withdrawals, at periodic intervals, through a
systematic withdrawal program. Minimum payments are $100. You may choose from
schedules of monthly, quarterly, semi-annual, or annual payments. You may
start, stop, increase, or decrease payments. You may elect to (1) start
withdrawals as early as 30 days after the issue date of the Contract and (2)
take withdrawals from the Fixed Account or any Division. Systematic withdrawals
are subject to the terms and conditions applicable to other partial withdrawals.

REDUCTION IN ADMINISTRATIVE EXPENSE CHARGE

We may reduce the Administrative Expense Charge imposed under certain Qualified
Contracts for employer sponsored plans. Any such reductions will reflect
differences in costs or services and will not be unfairly discriminatory as to
any person. Differences in costs and services result from factors such as
reduced sales expenses or administrative efficiencies relating to serving a
large number of employees of a single employer and functions assumed by the
employer that we otherwise would have to perform.

OTHER ASPECTS OF THE CONTRACTS

Only an officer of AGL can agree to change or waive the provisions of any
Contract. The Contracts are non-participating, which means they are not
entitled to share in any dividends, profits or surplus of AGL.

OWNERS, ANNUITANTS, AND BENEFICIARIES; ASSIGNMENTS

You, as the Owner of a Contract, will be the same as the Annuitant, unless you
choose a different Annuitant when you purchase a Contract. In the case of joint
ownership, both Owners must join in the exercise of any rights or privileges
under the Contract. You choose the Annuitant and any Contingent Annuitant in
the application for a Contract and may not change that choice.

You choose the Beneficiary and any Contingent Beneficiary when you purchase a
Contract. You may change a Beneficiary or Contingent Beneficiary before the
Annuity Commencement Date, while the Annuitant is still alive. The payee may
make this change after the Annuity Commencement Date. We will make any
designation of a new Beneficiary or Contingent Beneficiary effective as of the
date it is signed. However, the change in designation will not affect any
payments we make or action we take before we receive the Written request. We
also need the Written consent of any irrevocably-named Beneficiary or Contingent
Beneficiary before we make a change. Under certain retirement programs, the law
may require spousal consent to name or change a Beneficiary to a person other
than the spouse. We are not responsible for the validity of any designation of a
Beneficiary or Contingent Beneficiary.

If the Beneficiary or Contingent Beneficiary is not living at the time we are to
make any payment, you as the Owner will be the Beneficiary. If you are not then
living, your estate will be the Beneficiary.

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<PAGE>

In the case of joint ownership, we will treat the surviving joint Owner as the
Beneficiary upon the death of a joint Owner. We will not recognize any other
designation of Beneficiary, unless joint Owners provide written instructions to
pay death proceeds in a different manner.

Owners and other payees may assign their rights under Qualified Contracts only
in certain narrow circumstances referred to in the Contracts. Owners and other
payees may assign their rights under Non-Qualified Contracts, including their
ownership rights. We take no responsibility for the validity of any assignment.
Owners must make a change in ownership rights in Writing and send a copy to our
Home Office. We will make the change effective on the date it was made.
However, we are not bound by a change until the date we record it. The rights
under a Contract are subject to any assignment of record at our Home Office. An
assignment or pledge of a Contract may have adverse tax consequences. (See
"Federal Income Tax Matters.")

REPORTS

We will mail to Owners (or anyone receiving payments following the Annuity
Commencement Date), any reports and communications required by applicable law.
We will mail to the last known address of record. You should give us prompt
written notice of any address change.

RIGHTS RESERVED BY US

Upon notice to the Owner, we may modify a Contract to the extent necessary to:

. reflect a change in the Separate Account or any Division;

. create new separate accounts;

. operate the Separate Account in any form permitted under the 1940 Act or
in any other form permitted by law;

. transfer any assets in any Division to another Division, to one or more
separate accounts, or the Fixed Account;

. add, combine or remove Divisions in the Separate Account, or combine the
Separate Account with another separate account;

. add, restrict or remove Guarantee Periods of the Fixed Account;

. make any new Division available to you on a basis we determine;

. substitute, for the shares held in any Division, the shares of another
Series or the shares of another investment company or any other investment
permitted by law;

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<PAGE>

. make any changes required by the Code or by any other law, regulation or
interpretation to continue treatment of the Contract as an annuity;

. commence deducting premium taxes or adjust the amount of premium taxes
deducted in accordance with state laws that apply; or

. make any changes required to comply with the rules of any Series.

When required by law, we will obtain (1) your approval of changes and (2) the
approval of any appropriate regulatory authority.

PAYMENT AND DEFERMENT

We will normally pay amounts surrendered or withdrawn from a Contract within
seven calendar days after the end of the Valuation Period in which we receive
the Written surrender or withdrawal request at our Home Office. A Beneficiary
may request the manner of payment of death proceeds within 60 days after the
death proceeds become payable. If we do not receive a Written request
specifying the manner of payment, we will pay the death benefit as a single sum,
normally within seven calendar days after the end of the Valuation Period that
contains the last day of the 60 day period. We reserve the right, however, to
defer payments or transfers out of the Fixed Account Value for up to six months.
Also, we reserve the right to defer payment of that portion of your Account
Value that is attributable to a purchase payment made by check for a reasonable
period of time (not to exceed 15 days) to allow the check to clear the banking
system.

Finally, we reserve the right to defer payment of any surrender, annuity
payment, or death proceeds out of the Variable Account Value if:

. the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission ("SEC");

. the SEC determines that an emergency exists, as a result of which disposal
of securities held in a Division is not reasonably practicable or it is
not reasonably practicable to fairly determine the Variable Account Value;
or

. the SEC by order permits the delay for the protection of Owners.

We may also postpone transfers and allocations of Account Value among the
Divisions and the Fixed Account under these circumstances.

37
<PAGE>

FEDERAL INCOME TAX MATTERS

GENERAL

We cannot comment on all of the federal income tax consequences associated with
the Contracts. Federal income tax law is complex. Its application to a
particular person may vary according to facts peculiar to the person.
Consequently, we do not intend for you to take this discussion as tax advice.
You should consult with a competent tax adviser before purchasing a Contract.

We base this discussion on our understanding of the law, regulations and
interpretations existing on the date of this Prospectus. Congress, in the past,
has enacted legislation changing the tax treatment of annuities in both the
Qualified and the Non-Qualified markets and may do so again in the future. The
Treasury Department may issue new or amended regulations or other
interpretations of existing tax law. The courts may also interpret the tax law
in ways that affect the tax treatment of annuities. Any such change could have
a retroactive effect. We suggest that you consult your legal or tax adviser on
these issues.

The discussion does not address federal estate and gift tax, or social security
tax, or any state or local tax consequences associated with the Contracts.

NON-QUALIFIED CONTRACTS

Purchase Payments. Purchasers of a Contract that does not qualify for special
tax treatment and is "Non-Qualified" may not deduct from their gross income the
amount of purchase payments made.

Tax Deferral Before Annuity Commencement Date. Owners who are natural persons
are not taxed currently on (1) increases in their Account Value resulting from
interest earned in the Fixed Account, or (2) the investment experience of the
Separate Account so long as the Separate Account complies with certain
diversification requirements. These requirements mean that the Separate Account
must invest in Series that are "adequately diversified" in accordance with
Treasury Department regulations. We do not control the Series, but we have
received commitments from the investment advisers to the Series to use their
best efforts to operate the Series in compliance with these diversification
requirements. A Contract investing in a Series that failed to meet the
diversification requirements would subject Owners to current taxation of income
in the Contract for the period of such diversification failure (and any
subsequent period). Income means the excess of the Account Value over the
Owner's investment in the Contract (discussed below).

Control over allocation of values among different investment alternatives may
cause Owners or persons receiving annuity payments to be treated as the owners
of the Separate Account's assets for tax purposes. However, current regulations
do not provide guidance as to how to avoid this result. We reserve the right to
amend the Contracts in any way necessary to avoid this result. The Treasury
Department has stated that it may establish standards through regulations or
rulings. These standards may apply only prospectively, although they could
apply retroactively if the Treasury Department considers the standards not to
reflect a new position.

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<PAGE>

Owners that are not natural persons that is, Owners such as corporations are
taxed currently on annual increases in their Account Value, unless an exception
applies. Exceptions apply for, among other things, Owners that are not natural
persons but that hold a Contract as an agent for a natural person.

Taxation of Annuity Payments. Part of each annuity payment received after the
Annuity Commencement Date is excludible from gross income through the use of an
exclusion ratio.

In the case of Fixed Annuity Payments, the excludible portion of each payment is
found by multiplying:

. the amount paid, by

. the ratio of the investment in the Contract (discussed below) to the
expected return under the Fixed Annuity Payment Option.

In the case of Variable Annuity Payments, the excludible portion of each payment
is the investment in the Contract divided by the number of expected payments.

In both cases, the remaining portion of each annuity payment, and all payments
made after the investment in the Contract has been reduced to zero, are included
in the payee's income. Should annuity payments stop on account of the death of
the Annuitant before the investment in the Contract has been fully paid out, the
payee is allowed a deduction for the unpaid amount. If the payee is the
Annuitant, the deduction is taken on the final tax return. If the payee is a
Beneficiary, that Beneficiary may receive the balance of the total investment as
payments are made or on the Beneficiary's final tax return. An Owner's
"investment in the Contract" is the amount equal to the portion of purchase
payments made by or on behalf of the Owner that have not been excluded or
deducted from the individual's gross income, less amounts previously received
under the Contract that were not included in income.

Taxation of Partial Withdrawals and Total Surrenders. Partial withdrawals from
a Contract are includible in income to the extent that the Owner's Account Value
exceeds the investment in the Contract. In the event you surrender a Contract
in its entirety, the amount of your investment in the Contract is excludible
from income, and any amount you receive in excess of your investment in the
Contract is includible in income. All annuity contracts or certificates we
issue to the same Owner during any calendar year are aggregated for purposes of
determining the amount of any distribution that is includible in gross income.

Penalty Tax on Premature Distributions. In the case of such a distribution,
there may be imposed a federal tax penalty equal to 10% of the amount treated as
taxable income. The penalty tax will not apply, however, to distributions:

. made on or after the recipient reaches age 59 1/2,

. made on account of the recipient's becoming disabled,

39
<PAGE>

. that are made after the death of the Owner before the Annuity Commencement
Date or of the payee after the Annuity Commencement Date (or if such
person is not a natural person, that are made after the death of the
primary Annuitant, as defined in the Code), or

. that are part of a series of substantially equal periodic payments made at
least annually over the life (or life expectancy) of the Annuitant or the
joint life (or joint life expectancies) of the Annuitant and the
Beneficiary, provided such payments are made for a minimum of 5 years and
the distribution method is not changed before the recipient reaches age 59
1/2 (except in the case of death or disability).

Premature distributions may result from an early Annuity Commencement Date, an
early surrender, partial withdrawal from or assignment of a Contract, or the
early death of an Annuitant, unless the third clause listed above applies.

Payment of Death Proceeds. Special rules apply to the distribution of any death
proceeds payable under the Contract. (See "Death Proceeds.")

Assignments and Loans. An assignment, loan, or pledge under a Non-Qualified
Contract is taxed in the same manner as a partial withdrawal, as described
above. Repayment of a loan or release of an assignment or pledge is treated as
a new purchase payment.

INDIVIDUAL RETIREMENT ANNUITIES ("IRAs")

Purchase Payments. Individuals who are not active participants in a tax
qualified retirement plan may, in any year, deduct from their taxable income
purchase payments made to an IRA equal to the lesser of $2,000 or 100% of the
individual's earned income. In the case of married individuals filing a joint
return, the deduction will, in general, be the lesser of $4,000 or 100% of the
combined earned income of both spouses, reduced by any deduction for an IRA
purchase payment allowed to the spouse. Single persons who participate in a
tax-qualified retirement plan and who have adjusted gross income not in excess
of $31,000 for 1999 may fully deduct their IRA purchase payments. Those who
have adjusted gross income in excess of $41,000 for 1999 will not be able to
deduct purchase payments. For those with adjusted gross income in the range
between $31,000 and $41,000 in 1999, the deduction decreases to zero, based on
the amount of income. Beginning in 2000, that income range will increase, as
follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 and
thereafter
- -------------------------------------------------------------------------------------------------------------
$32,000 $33,000 $34,000 $40,000 $45,000 $50,000
to to to to to to
$42,000 $43,000 $44,000 $50,000 $55,000 $60,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>

Similarly, the otherwise deductible portion of an IRA purchase payment will be
phased out, in the case of married individuals filing joint tax returns, with
adjusted gross income between $51,000 and $61,000 in 1999, and in the case of
married individuals filing separately, with adjusted gross income between $0 and
$10,000 in 1999. (A husband and wife who file separate returns and live apart
at all times during the taxable year are not treated as married individuals.)
Beginning in 2000, the income range over

40
<PAGE>

which the otherwise deductible portion of an IRA purchase payment will be phased
out for married individuals filing joint tax returns will increase as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 and
thereafter
- ---------------------------------------------------------------------------------------------------------------------
$52,000 $53,000 $54,000 $60,000 $65,000 $70,000 $75,000 $ 80,000
to to to to to to to to
$62,000 $63,000 $64,000 $70,000 $75,000 $80,000 $85,000 $100,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

A married individual filing a joint tax return, who is not an active participant
in a tax-qualified retirement plan, but whose spouse is an active participant in
such a plan, may, in any year, deduct from his or her taxable income purchase
payments for an IRA equal to the lesser of $2,000 or 100% of the individual's
earned income. For the individual, the adjusted gross income range over which
the otherwise deductible portion of an IRA purchase payment will be phased out
is $150,000 to $160,000.

Tax Free Rollovers. Amounts may be transferred, in a tax-free rollover, from
(1) a tax-qualified plan to an IRA or (2) from one IRA to another IRA if the
transfer meets certain conditions. All taxable distributions ("eligible
rollover distributions") from tax qualified plans are eligible to be rolled over
with the exception of:

. annuities paid over a life or life expectancy,

. installments for a period of ten years or more, and

. required minimum distributions under section 401(a)(9) of the Code.

Rollovers may be accomplished in two ways. First, we may pay an eligible
rollover distribution directly to an IRA (a "direct rollover"). Second, we may
pay the distribution directly to the Annuitant and then, within 60 days of
receipt, the Annuitant may roll the amount over to an IRA. However, any amount
that was not distributed as a direct rollover will be subject to 20% income tax
withholding.

Distributions from an IRA. Amounts received under an IRA as annuity payments,
upon partial withdrawal or total surrender, or on the death of the Annuitant,
are included in the Annuitant's or other recipients' income. If nondeductible
purchase payments have been made, a pro rata portion of such distributions may
not be includible in income. A 10% penalty tax is imposed on the amount
includible in gross income from distributions that occur before the Annuitant
reaches age 59 1/2 and that are not made on account of death or disability, with
certain exceptions. These exceptions include:

. distributions that are part of a series of substantially equal periodic
payments made at least annually over the life (or life expectancy) of the
Annuitant or the joint lives (or joint life expectancies) of the Annuitant
and the Beneficiary; provided such payments are made for a minimum of 5
years and the distribution method is not changed before the recipient
reaches age 59 1/2 (except in the case of death or disability);

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<PAGE>

. distributions for medical expenses in excess of 7.5% of the Annuitant's
adjusted gross income without regard to whether the Annuitant itemizes
deductions on his or her tax return;

. distributions for health insurance premiums to an unemployed individual
who has received unemployment compensation for at least 12 consecutive
weeks;

. distributions for qualified first-time home purchases for the individual,
a spouse, children, grandchildren, or ancestor of the individual or the
individual's spouse, subject to a $10,000 lifetime maximum; and

. distributions for higher education expenses for the individual, a spouse,
children, or grandchildren.

Distributions of minimum amounts required by the Code must commence by April 1
of the calendar year following the calendar year in which the Annuitant reaches
age 70 1/2 or retires (whichever is later). Additional distribution rules apply
after the death of the Annuitant. These rules are similar to those governing
distributions on the death of an Owner (or other payee during the Annuity
Period) under a Non-Qualified Contract. (See "Death Proceeds.") Failure to
comply with the minimum distribution rules will result in a penalty tax of 50%
of the amount by which the minimum distribution required exceeds the actual
distribution.

ROTH IRAs

Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to $2,000 per
year. This permitted contribution is phased out for adjusted gross income
between $95,000 and $110,000 in the case of single taxpayers, between $150,000
and $160,000 in the case of married taxpayers filing joint returns, and between
$0 and $10,000 in the case of married taxpayers filing separately. An overall
$2,000 annual limitation continues to apply to all of a taxpayer's IRA
contributions, including Roth IRAs and non-Roth IRAs.

An individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or a
previously deductible IRA contribution. There are no similar limitations on
rollovers from a Roth IRA to another Roth IRA.

Qualified distributions from Roth IRAs are entirely tax-free. A qualified
distribution requires that (1) the individual has held the Roth IRA for at least
five years and (2) the distribution is made either after the individual reaches
age 59 1/2, on the individual's death or disability, or as qualified first-time
home purchase. Qualified Distributions for a qualified first-time home
purchase, are subject to a $10,000 lifetime maximum for the individual, a
spouse, child, grandchild, or ancestor of such individual or the individual's
spouse.

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<PAGE>

SIMPLIFIED EMPLOYEE PENSION PLANS

Eligible employers may establish an IRA plan known as a simplified employee
pension plan ("SEP"), if certain requirements are met. An employee may make
contributions to a SEP in accordance with the rules applicable to IRAs discussed
above. Employer contributions to an employee's SEP are deductible by the
employer and are not currently includible in the taxable income of the employee,
provided that total employer contributions do not exceed the lesser of 15% of an
employee's compensation or $30,000.

SIMPLE RETIREMENT ACCOUNTS

Eligible employers may establish an IRA plan known as a simple retirement
account ("SRA"), if they meet certain requirements. Under an SRA, the employer
contributes elective employee compensation deferrals up to a maximum of $7,000 a
year for 1999 to the employee's SRA. The employer must, in general, make a
fully vested matching contribution for employee deferrals up to a maximum of 3%
of compensation.

OTHER QUALIFIED PLANS

Purchase Payments. Purchase payments made by an employer under a pension,
profit sharing, or annuity plan qualified under section 401 or 403(a) of the
Code, not in excess of certain limits, are deductible by the employer. The
purchase payments are also excluded from the current income of the employee.

Distributions Before the Annuity Commencement Date. Purchase payments
includible in an employee's taxable income (less any amounts previously received
that were not includible in the employee's taxable income) represent the
employee's "investment in the Contract." Amounts received before the Annuity
Commencement Date under a Contract in connection with a section 401 or 403(a)
plan are generally allocated on a pro-rata basis between the employee's
investment in the Contract and other amounts. A lump-sum distribution will not
be includible in income in the year of distribution, if the employee transfers,
within 60 days of receipt, all amounts received (less the employee's investment
in the Contract), to another tax-qualified plan, to an individual retirement
account or an IRA in accordance with the rollover rules under the Code.

However, any amount that is not distributed as a direct rollover will be subject
to 20% income tax withholding. (See "Tax Free Rollovers.") Special tax
treatment may be available, for tax years beginning before December 31, 1999, in
the case of certain lump-sum distributions that are not rolled over to another
plan or IRA.

A 10% penalty tax is imposed on the amount includible in gross income from
distributions that occur before the employee reaches age 59 1/2 and that are not
made on account of death or disability, with certain exceptions. These
exceptions include distributions that are:

. part of a series of substantially equal periodic payments made at least
annually beginning after the employee separates from service and made over
the life (or life expectancy) of the employee or the joint lives (or joint
life expectancies) of the employee and the Beneficiary,

43
<PAGE>

provided such payments are made for at least 5 years and the distribution
method is not changed before the recipient reaches age 59 1/2 (except in
the case of death or disability);

. made after the employee's separation from service on account of early
retirement after attaining age 55;

. made to pay for qualified higher education or first-time home buyer
expenses;

. made to an alternate payee pursuant to a qualified domestic relations
order, if the alternate payee is the spouse or former spouse of the
employee; or

. distributions for medical expenses in excess of 7.5% of the Annuitant's
adjusted gross income without regard to whether the Annuitant itemizes
deductions on his or her tax return; or

. distributions for health insurance premiums to an unemployed individual
who has received unemployment compensation for at least 12 consecutive
weeks.

Annuity Payments. A portion of annuity payments received under Contracts for
section 401 and 403(a) plans after the Annuity Commencement Date may be
excludible from the employee's income, in the manner discussed above, in
connection with Variable Annuity Payments, under "Non-Qualified Contracts -
Taxation of Annuity Payments." The difference is that, here, the number of
expected payments is determined under a provision in the Code. Distributions of
minimum amounts required by the Code generally must commence by April 1 of the
calendar year following the calendar year in which the employee reaches age
70 1/2 (or retires, if later). Failure to comply with the minimum distribution
rules will result in a penalty tax of 50% of the amount by which the minimum
distribution required exceeds the actual distribution.

Self-Employed Individuals. Various special rules apply to tax-qualified plans
established by self-employed individuals.

PRIVATE EMPLOYER UNFUNDED DEFERRED COMPENSATION PLANS

Purchase Payments. Private taxable employers may establish unfunded, Non-
Qualified deferred compensation plans for a select group of management or highly
compensated employees and/or for independent contractors. To avoid current
taxation, these benefits must be subject to a substantial risk of forfeiture.

These types of programs allow individuals to defer (1) receipt of up to 100% of
compensation that would otherwise be includible in income and (2) payment of
federal income taxes on the amounts.

Deferred compensation plans represent a contractual promise on the part of the
employer to pay current compensation at some future time. The Contract is owned
by the employer and is subject to the claims of the employer's creditors. The
individual has no right or interest in the Contract and is entitled only to
payment from the employer's general assets in accordance with plan provisions.
Purchase payments are

44
<PAGE>

not currently deductible by the employer until benefits are included in the
taxable income of the employee.

Taxation of Distributions. Amounts that an individual receives from a private
employer deferred compensation plan are includible in gross income for the
taxable year in which such amounts are paid or otherwise made available.

FEDERAL INCOME TAX WITHHOLDING AND REPORTING

Amounts distributed from a Contract, to the extent includible in taxable income,
are subject to federal income tax withholding.

In some cases, if you own more than one Qualified annuity contract, the
contracts may be considered together to determine whether the federal tax law
requirement for minimum distributions after age 70 1/2, or retirement in
appropriate circumstances, has been satisfied. You may rely on distributions
from another annuity contract to satisfy the minimum distribution requirement
under a Qualified Contract we issued. However, you must sign a waiver releasing
us from any liability to you for not calculating and reporting the amount of
taxes and penalties payable for failure to make required minimum distributions
under the Contract.

TAXES PAYABLE BY AGL AND THE SEPARATE ACCOUNT

AGL is taxed as a life insurance company under the Code. The operations of the
Separate Account are part of the total operations of AGL and are not taxed
separately. Under existing federal income tax laws, AGL is not taxed on
investment income derived by the Separate Account (including realized and
unrealized capital gains) with respect to the Contracts. AGL reserves the right
to allocate to the Contracts any federal, state or other tax liability that may
result in the future from maintenance of the Separate Account or the Contracts.

Certain Series may elect to pass through to AGL any taxes withheld by foreign
taxing jurisdictions on foreign source income. Such an election will result in
additional taxable income and income tax to AGL. The amount of additional income
tax, however, may be more than offset by credits for the foreign taxes withheld
that the Series will also pass through. These credits may provide a benefit to
AGL.

DISTRIBUTION ARRANGEMENTS

Individuals who sell the Contracts will be licensed by state insurance
authorities as agents of AGL. The individuals will also be registered
representatives of (1) American General Securities Incorporated ("AGSI"), the
principal underwriter of the Contracts, or (2) other broker-dealer firms.
However, some individuals may be representatives of firms that are exempt from
broker-dealer regulation. AGSI and any non-exempt broker-dealer firms are
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as broker-dealers and are members of the National
Association of Securities Dealers, Inc.

45
<PAGE>

AGSI is an affiliate of AGL. AGSI's principal business address is 2727 Allen
Parkway, Houston, Texas 77019-2191. AGL offers the Contracts on a continual
basis. AGL does not pay any compensation for distribution of the Contracts.

SERVICES AGREEMENTS

American General Life Companies ("AGLC") is party to a general services
agreement with AGL. AGLC, an affiliate of AGL, is a corporation incorporated in
Delaware on November 24, 1997. Its address is 2727-A Allen Parkway, Houston,
Texas 77019-2191. Under this agreement, AGLC provides services to AGL,
including most of the administrative, data processing, systems, customer
services, product development, actuarial, auditing, accounting and legal
services for AGL and the Contracts.

AGL has entered into administrative services agreements with the advisers or
managers for the mutual funds that offer shares to the Divisions. AGL receives
fees for the administrative services it performs. These fees do not result in
any additional charges under the Contracts that are not described under "Charges
under the Contracts."

LEGAL MATTERS

We are not involved in any legal matters about the Separate Account that would
be considered material to the interests of Owners. Steven A. Glover, Esquire,
Senior Counsel of AGLC has passed upon the legality of the Contracts described
in this Prospectus.

YEAR 2000 CONSIDERATIONS

As of March 10, 2000, all of our ultimate parent, American General Corporation's
("AGC") major technology systems, programs, and applications, including those
which rely on third parties, are operating smoothly following our transition
into 2000. We have experienced no interruptions to normal business operations,
including the processing of customer account data and transactions. We will
continue to monitor our technology systems, including critical third party
dependencies, as necessary to maintain our Year 2000 readiness. We do not
expect any future disruptions, if they occur, to have a material effect on the
company=s results of operations, liquidity, or financial condition.

Through December 31, 1999, AGC incurred and expensed pretax costs of $98 million
related to Year 2000 readiness, including $18 million in 1999 and $65 million in
1998. In 1999, Year 2000 readiness expenses were included in division earnings.
The 1998 expenses were excluded from division earnings, consistent with the
manner in which we reviewed division results. In addition, we accelerated the
planned replacement of certain systems as part of our Year 2000 plans. The cost
of these replacement systems was immaterial. We do not anticipate incurring any
significant costs in the future to maintain Year 2000 readiness.

46
<PAGE>

OTHER INFORMATION ON FILE

We have filed a Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933 for the Contracts described in this
Prospectus. We have not included all of the information in the Registration
Statement and its exhibits. Statements contained in this Prospectus concerning
the Contracts and other legal instruments are intended to be summaries. For a
complete statement of their terms, you should refer to the documents that we
filed with the Securities and Exchange Commission.

We will send you a Statement on request without charge. Its contents are as
follows:

TABLE OF CONTENTS

<S> <C>
General Information............................................... 2

Regulation and Reserves........................................... 2

Independent Auditors.............................................. 4

Services.......................................................... 4

Principal Underwriter............................................. 4

Annuity Payments.................................................. 4
Gender of Annuitant............................................ 4
Misstatement of Age or Gender and Other Errors................. 5

Change of Investment Adviser or Investment Policy................. 5

Performance Data for the Divisions................................ 5
Average Annual Total Return Calculations....................... 5
Cumulative Total Return Calculations........................... 6
Hypothetical Performance....................................... 7
Money Market Division Yield and Effective Yield Calculations... 9
Performance Comparisons........................................ 9

Effect of Tax-deferred Accumulation............................... 10

Financial Statements.............................................. 11

Index to Financial Statements..................................... 12

</TABLE>

47
<PAGE>

(THE FOLLOWING DOCUMENTS ARE NOT PART OF A PROSPECTUS.)

SELECT RESERVE VARIABLE ANNUITY
DISCLOSURES AND FORMS SECTION

INDEX

<TABLE>

<S> <C>
Individual Retirement Annuity Disclosure Statement and Financial Disclosure page 1

1035 Exchange Instructions page 11

Qualified and Non-Qualified Funds Transfer Instructions page 12

Assignment and Transfer Request page 13

Service Request Form page 15

Change of Beneficiary Form page 17

Statement of Additional Information Request Form page 19

</TABLE>
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

(THIS DOCUMENT IS NOT PART OF A PROSPECTUS)

INDIVIDUAL RETIREMENT ANNUITY DISCLOSURE STATEMENT
INTRODUCTION

THIS DISCLOSURE STATEMENT IS DESIGNED FOR OWNERS OF IRAs ISSUED BY THE AMERICAN
GENERAL LIFE INSURANCE COMPANY ON OR AFTER APRIL 3, 2000.

This Disclosure Statement is not part of your annuity contract but contains
general and standardized information which must be furnished to each person who
is issued an Individual Retirement Annuity. You must refer to your annuity
contract to determine your specific rights and obligations thereunder.

REVOCATION

If you are purchasing a new or rollover IRA, then if for any reason you, as a
recipient of this Disclosure Statement, decide within 20 days from the date your
annuity contract is delivered that you do not desire to retain your IRA, written
notification to the Company must be mailed, together with your annuity contract,
within that period. If such notice is mailed within 20 days, current annuity
contract value or contributions if required, without adjustments for any
applicable sales commissions or administrative expenses, will be refunded.

MAIL NOTIFICATION OF REVOCATION AND YOUR ANNUITY CONTRACT TO:

American General Life Insurance Company
Annuity Administration Department
P. O. Box 1401
Houston, Texas 77251-1401
Phone No. (800) 813-5065 and (713) 831-3505.

ELIGIBILITY

Under Internal Revenue Code ("Code") Section 219, if you are not an active
participant (see A. below), you may make a contribution of up to the lesser of
$2,000 or 100% of compensation and take a deduction for the entire amount
contributed. If you are a married individual filing a joint return, and your
compensation is less than your spouse's, the total deduction will, in general,
be the lesser of $4,000 or 100% of the combined earned income of both spouses,
reduced by any deduction for an IRA purchase payment allowed to your spouse. If
you are an active participant, but have an adjusted gross income (AGI) below a
certain level (see B. below), you may still make a deductible contribution. If,
however, you or your spouse is an active participant and your combined AGI is
above the specified level, the amount of the deductible contribution you may
make to an IRA will be phased down and eventually eliminated.

A. ACTIVE PARTICIPANT

You are an "active participant" for a year if you are covered by a retirement
plan. You are covered by a "retirement plan" for a year if your employer or
union has a retirement plan under which money is added to your account or you
are eligible to earn retirement credits. For example, if you are covered under
a profit-sharing plan, certain government plans, a salary reduction arrangement
(such as a tax sheltered annuity

Page 1
<PAGE>

arrangement or a 401(k) plan), a Simplified Employee Pension program (SEP), any
Simple Retirement Account or a plan which promises you a retirement benefit
which is based upon the number of years of service you have with the employer,
you are likely to be an active participant. Your Form W-2 for the year should
indicate your participation status.

You are an active participant for a year even if you are not yet vested in your
retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans, you may be an active participant even if you were only with the
employer for part of the year.

You are not considered an active participant if you are covered in a plan only
because of your service as 1) an Armed Forces Reservist for less than 90 days of
active service, or 2) a volunteer firefighter covered for firefighting service
by a government plan. Of course, if you are covered in any other plan, these
exceptions do not apply.

If you are married, (i) filed a separate tax return, and did not live with your
spouse at any time during the year, or (ii) filed a joint return and have a
joint AGI of less than $150,000, your spouse's active participation will not
affect your ability to make deductible contributions. If you are married and
file jointly, your deduction will be phased out between an AGI of $150,000 to
$160,000.

B. ADJUSTED GROSS INCOME (AGI)

If you are an active participant, you must look at your Adjusted Gross Income
for the year (if you and your spouse file a joint tax return, you use your
combined AGI) to determine whether you can make a deductible IRA contribution.
Your tax return will show you how to calculate your AGI for this purpose. If
you are at or below a certain AGI level, called the Threshold Level, you are
treated as if you were not an active participant and can make a deductible
contribution under the same rules as a person who is not an active participant.

If you are single, the Threshold Level is $30,000. If you are married and file
a joint tax return, the Threshold Level is $50,000. If you are married but file
a separate tax return, the Threshold Level will be $0.

For taxable years beginning in 1999, the Threshold Levels for single individuals
and for married individuals filing jointly increases as follows:

Threshold Level
For taxable years beginning in: Single Married (filing jointly)
- ------------------------------- ------- ------------------------
1999 $31,000 $51,000
2000 $32,000 $52,000
2001 $33,000 $53,000
2002 $34,000 $54,000
2003 $40,000 $60,000
2004 $45,000 $65,000
2005 $50,000 $70,000
2006 $50,000 $75,000
2007 and thereafter $50,000 $80,000

Page 2
<PAGE>

A married individual filing a joint tax return, who is not an active
participant, but whose spouse is, may, in any year, make deductible IRA
contributions equal to the lesser of $2,000 or 100% of the individual's earned
income. The Threshold Level for such individual is $150,000.

If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level

(AGI - Threshold Level) is called your Excess AGI. The Maximum Allowable
Deduction is $2,000. In the case of a married individual filing jointly and
earning less than his or her spouse, the maximum Allowable Deduction is the
lesser of $2,000 or the spouse's income, less any deductible IRA contributions
or contributions to a Roth IRA. You can estimate your Deduction Limit as
follows:

(Your Deduction Limit may be slightly higher if you use this formula rather than
the table provided by the IRS.)

$10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
--------------------
$10,000

For the taxable year beginning in 2007, the deduction limit for married
individuals filing jointly will be determined as follows:

$10,000 - Excess AGI
--------------------
$20,000 x Maximum Allowable Deduction = Deduction Limit

You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must
round it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed 100%
of your compensation.

EXAMPLE 1: Ms. Smith, a single person, is an active participant and has an
AGI of $36,619. In 1999, she would calculate her deductible IRA
contribution as follows:

Her AGI is $36,619
Her Threshold Level is $31,000
Her Excess AGI is (AGI - Threshold Level) or ($36,619-$31,000) = $5,619
Her Maximum Allowable Deduction is $2,000

So, her IRA deduction limit is:

$10,000 - $5,619
----------------
$10,000 x $2,000 = $876 (rounded to $880)

Page 3
<PAGE>

EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns more
than $2,000 and one is an active participant. Their 2000 combined AGI is
$55,255. Neither spouse contributed to a Roth IRA. They may each contribute to
an IRA and calculate their deductible contributions to each IRA as follows:

Their AGI is $55,255 Their Threshold Level is $52,000 Their Excess AGI is
(AGI - Threshold Level) or ($55,255 - $52,000) = $3,255 The Maximum
Allowable Deduction for each spouse is $2,000 So, each spouse may compute
his or her IRA deduction limit as follows:

$10,000 - 3,255
---------------
$10,000 x $2,000 = $1,349 (rounded to $1,350)

EXAMPLE 3: If, in Example 2, Mr. Young did not earn any compensation, each
spouse could still contribute to an IRA and calculate their deductible
contribution to each IRA as in Example 2.

EXAMPLE 4: In 1999, Mr. Jones, a married person, files a separate tax return
and is an active participant. He has $1,500 of compensation and wishes to make
a deductible contribution to an IRA.

His AGI is $1,500
His Threshold Level is $0
His Excess AGI is (AGI - Threshold Level) or $1,500-$0) = $1,500
His Maximum Allowable Deduction is $2,000
So, his IRA deduction limit is:

$10,000 - $1,500 x $2,000 = $1,700
----------------
$10,000

Even though his IRA deduction limit under the formula is $1,700, Mr. Jones
may not deduct an amount in excess of his compensation, so, his actual
deduction is limited to $1,500.

NON-DEDUCTIBLE CONTRIBUTIONS TO IRAs

Even if you are above the Threshold Level and thus may not make a deductible
contribution of up to $2,000 (or up to $4,000 in the case of married individuals
filing a joint return), you may still contribute up to the lesser of 100% of
compensation or $2,000 to an IRA ($4,000 in the case of married individuals
filing a joint return). The amount of your contribution which is not deductible
will be a non-deductible contribution to the IRA. You may also choose to make a
contribution non-deductible even if you could have deducted part or all of the
contribution. Interest or other earnings on your IRA contribution, whether from
deductible or non-deductible contributions, will not be taxable to you until
taken out of your IRA and distributed to you.

If you make a non-deductible contribution to an IRA, you must report the amount
of the non-deductible contribution to the IRS on Form 8606 as a part of your tax
return for the year.

Page 4
<PAGE>

You may make a $2,000 contribution (or up to $4,000 in the case of married
individuals filing a joint return) at any time during the year, if your
compensation for the year will be at least $2,000 (or up to $4,000 in the case
of married individuals filing a joint return), without having to know how much
will be deductible. When you fill out your return, you may then figure out how
much is deductible.

You may withdraw an IRA contribution made for a year any time before April 15 of
the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the non-deductible amount, or to
leave it in the IRA and designate that portion as a non-deductible contribution
on your tax return.

IRA DISTRIBUTIONS

Generally, IRA distributions which are not rolled over (see "Rollover IRA
Rules," below) are included in your gross income in the year they are received.
Non-deductible IRA contributions, however, are made using income which has
already been taxed (that is, they are not deductible contributions). Thus, the
portion of the IRA distributions consisting of non-deductible contributions will
not be taxed again when received by you. If you make any non-deductible IRA
contributions, each distribution from your IRA(s) will consist of a non-taxable
portion (return of deductible contributions, if any, and account earnings).

Thus, you may not take a distribution which is entirely tax-free. The following
formula is used to determine the non-taxable portion of your distributions for a
taxable year:

Remaining
Non-Deductible Contributions
----------------------------
Year-End Total IRA Balances x Total Distributions = Nontaxable Distributions
(for the year) (for the year)

To figure the year-end total IRA balance, you treat all of your IRAs as a single
IRA. This includes all regular IRAs (whether accounts or annuities), as well as
Simplified Employee Pension (SEP) IRAs, and Rollover IRAs. You also add back
the distributions taken during the year.

EXAMPLE: An individual makes the following contributions to his or her IRA(s).

YEAR DEDUCTIBLE NON-DEDUCTIBLE
---- ----------- --------------
1991 $ 2,000
1992 1,800
1995 1,000 $1,000
1997 600 1,400
------- ------
$ 5,400 $2,400

Page 5
<PAGE>

Deductible Contributions: $5,400
Non-Deductible Contributions: 2,400
Earnings on IRAs: 1,200
------
Total Account Balance of IRA(s) as of 12/31/99: $9,000
(before distributions in 1999).

In 1999, the individual takes a distribution of $3,000. The total account
balance in the IRAs on 12/31/99 before 1999 distributions is $9,000. The non-
taxable portion of the distributions for 1999 is figured as follows:

Total non-deductible contributions $2,400
------
Total account balance in the IRAs, before distributions $9,000 x $3,000 = $800

Thus, $800 of the $3,000 distribution in 1999 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1999.

ROLLOVER IRA RULES
1. IRA TO IRA

You may withdraw, tax-free, all or part of the assets from an IRA and reinvest
them in one or more IRAs. The reinvestment must be completed within 60 days of
receipt of the withdrawal. No IRA deduction is allowed for the reinvestment.
Amounts required to be distributed because the individual has reached age 70 1/2
may not be rolled over. The rollover of one IRA to another may be made no more
than once during a one year period.

2. EMPLOYER PLAN DISTRIBUTIONS TO IRA

All taxable distributions (known as "eligible rollover distributions") from
qualified pension, profit-sharing, stock bonus and tax sheltered annuity plans
may be rolled over to an IRA, with the exception of (1) annuities paid over a
life or life expectancy, (2) installments for a period of ten years or more, and
(3) required minimum distributions under section 401(a)(9).

Rollovers may be accomplished in two ways. First, you may elect to have an
eligible rollover distribution paid directly to an IRA (a "direct rollover").
Second, you may receive the distribution directly and then, within 60 days of
receipt, roll the amount over to an IRA. Under the law, however, any amount
that you elect not to have distributed as a direct rollover will be subject to
20 percent income tax withholding, and, if you are younger than age 59 1/2, may
result in a 10% excise tax on any amount of the distribution that is included in
income. Questions regarding distribution options under the Act should be
directed to your Plan Trustee or Plan Administrator, or may be answered by
consulting IRS Regulations (S)1.401(a)(31)-1, (S)1.402(c)-2T and
(S)31.3405(c)-1.

PENALTIES FOR PREMATURE DISTRIBUTIONS

If you receive a distribution from your IRA before you reach age 59 1/2, an
additional tax of 10 percent will be imposed under Code (S)72(t), unless the
distribution (a) occurs because of your death or disability, (b) is for

Page 6
<PAGE>

certain medical care expenses or to an unemployed individual for health
insurance premiums, (c) is received as a part of a series of substantially equal
payments over your life or life expectancy, (d) is received as a part of a
series of substantially equal payments over the lives or life expectancy of you
and your beneficiary, or (e) the distribution is contributed to a rollover IRA,
(f) is used for a qualified first time home purchase for you, your spouse,
children, grandchildren, or ancestor, subject to a $10,000 lifetime maximum or
(g) is for higher education purposes for you, your spouse, children or
grandchildren.

MINIMUM DISTRIBUTIONS

Under the rules set forth in Code (S)408(b)(3) and (S)401(a)(9), you may not
leave the funds in your annuity contract indefinitely. Certain minimum
distributions are required. These required minimum distributions may be taken
in one of two ways: (a) by withdrawing the balance of your annuity contract by a
"required beginning date," usually April 1 of the year following the date at
which you reach age 70 1/2; or (b) by withdrawing periodic distributions of the
balance in your annuity contract by the required beginning date. These periodic
distributions may be taken over (a) your life; (b) the lives of you and your
named beneficiary; (c) a period not extending beyond your life expectancy; or
(d) a period not extending beyond the joint life expectancy of you and your
named beneficiary.

If you do not satisfy the minimum distribution requirements, then, pursuant to
Code (S)4974, you may have to pay a 50% excise tax on the amount not distributed
as required that year.

The foregoing minimum distribution rules are discussed in detail in IRS
Publication 590, "Individual Retirement Arrangements."

REPORTING

You are required to report penalty taxes due on excess contributions, excess
accumulations, premature distributions, and prohibited transactions. Currently,
IRS Form 5329 is used to report such information to the Internal Revenue
Service.

PROHIBITED TRANSACTIONS

Neither you nor your beneficiary may engage in a prohibited transaction, as that
term is defined in Code (S)4975.

Borrowing any money from this IRA would, under Code (S)408(e)(3), cause the
annuity contract to cease to be an Individual Retirement Annuity and would
result in the value of the annuity being included in the owner's gross income in
the taxable year in which such loan is made.

Use of this annuity contract as security for a loan from the Company, if such
loan were otherwise permitted, would, under Code (S)408(e)(4), cause the portion
so used to be treated as a taxable distribution.

EXCESS CONTRIBUTIONS

Tax Code (S)4973 imposes a 6 percent excise tax as a penalty for an excess
contribution to an IRA. An excess contribution is the excess of the deductible
and nondeductible amounts contributed by the Owner to an IRA for that year over
the lesser of his or her taxable compensation or $2,000. (Different limits
apply in the case of a spousal IRA arrangement.) If the excess contribution is
not withdrawn by the due date of your tax

Page 7
<PAGE>

return (including extensions) you will be subject to the penalty. This 6% excise
tax is required to be paid each year that the excess contribution remains in the
IRA.

IRS APPROVAL

Your annuity contract and IRA endorsement have been approved by the Internal
Revenue Service as a tax qualified Individual Retirement Annuity. When
received, such approval by the Internal Revenue Service is a determination only
as to the form of the annuity and does not represent a determination of the
merits of such annuity.

This disclosure statement is intended to provide an overview of the applicable
tax laws relating to Individual Retirement Arrangements. It is not intended to
constitute a comprehensive explanation as to the tax consequences of your IRA.
AS WITH ALL SIGNIFICANT TRANSACTIONS SUCH AS THE ESTABLISHMENT OR MAINTENANCE
OF, OR WITHDRAWAL FROM AN IRA, APPROPRIATE TAX AND LEGAL COUNSEL SHOULD BE
CONSULTED. Further information may also be acquired by contacting your IRS
District Office or consulting IRS Publication 590.

FINANCIAL DISCLOSURE
(SELECT RESERVE VARIABLE ANNUITY, FORM NO. 97505)

This Financial Disclosure is applicable to IRAs using a Select Reserve Variable
Annuity (contract form number 97505) purchased from American General Life
Insurance Company on or after April 3, 2000. Earnings under variable annuities
are not guaranteed, and depend on the performance of the investment option(s)
selected. As such, earnings cannot be projected. Set forth below are the
charges associated with such annuities.

CHARGES:

(a) During the Accumulation Phase, a maximum charge of $25 for each transfer,
in excess of 12 free transfers annually, of contract value between
divisions of the Separate Account. During the Payout Phase (the time
during which regular payments are received), this charge is applicable for
each transfer in excess of six free transfers annually.

(b) To compensate for mortality and expense risks assumed under the contract,
variable divisions only will incur a daily charge at an annualized rate of
0.36% of the average Separate Account Value of the contract during both the
Accumulation and the Payout Phase.

(c) Premium taxes, if applicable, may be charged against Accumulation Value at
time of annuitization or upon the death of the Annuitant. If a
jurisdiction imposes premium taxes at the time purchase payments are made,
the Company may deduct a charge at that time, or defer the charge until the
purchase payments are withdrawn, whether on account of a full or partial
surrender, annuitization, or death of the Annuitant.

(d) To compensate for administrative expenses, a daily charge will be incurred
at an annualized rate of 0.04% of the average Separate Account Value of the
contract during the Accumulation and the Payout Phase.

Page 8
<PAGE>

(e) Each variable division will be charged a fee for asset management and other
expenses deducted directly from the underlying fund during the Accumulation
and Payout Phase. Total fees will range between 0.57% and 1.85%.

Page 9
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>

1035 EXCHANGE INSTRUCTIONS

- --------------------------------------------------------------------------------
1. Processing Rules

A 1035 exchange is one that qualified under IRC Section 1035 guidelines.

A 1035 exchange is for non-qualified funds only.

The Home Office does not offer tax advice. Applicants and contractowners
should contact their own tax advisors.

To qualify as a 1035 exchange, the following contract types are required:

* An annuity or life insurance contract in exchange for an annuity
contract.

In addition, the following contract type exchanges are required:

* Individual contract to individual contract;
* Joint contract to joint contract; and
* Two individual contracts on same annuitant(s) with the same owner(s) to
individual or joint contract.

The annuitant and owner on the exchanged contract must be the same on the
new contract.

To qualify as a full 1035 exchange, all existing cash value must be
transferred to the new contract and none of the cash value can be refunded.

Money from a 1035 exchange cannot be added to an existing annuity
contract--it must fund a new contract.

- --------------------------------------------------------------------------------
2. Forms Requirements

* Annuity Application (form number which is approved in the state
of application)

* Replacement form as required by state, if applicable

* Assignment and Transfer Request Form (L 6742 Rev 0300) for IRC
Section 1035(a) Exchange

* External company's contract/policy or lost contract/policy
statement

- --------------------------------------------------------------------------------
3. Signature Requirements

The annuitant of the new application (age 15 or older) must sign the
Annuity Application.

The proposed owner of the new contract must sign the Annuity Application
and the Absolute Assignment Form (L 6742 Rev 0300).

If the owner is a trust, then the trustee's signature and title are
required on the application and the Assignment and Transfer Request Form
(L 6742 Rev 0300).

Page 11
<PAGE>

QUALIFIED AND NON-QUALIFIED FUNDS
TRANSFER INSTRUCTIONS

- --------------------------------------------------------------------------------

1. Processing Rules

A transfer occurs when an existing policy/contract or account is liquidated
and proceeds are forwarded to another company or to the client.

There are three types of transfers:

* Trustee-to-Trustee (or Custodian) transfer: Proceeds are sent from one
company directly to another company to fund a like plan (Example: TSA to
TSA, IRA to IRA, Non-qualified to Non-qualified).

* Direct Rollover: Proceeds are sent from one company directly to another
company to fund a different type of plan (Example: TSA to IRA, 401(k) to
IRA, etc.).

* Rollover: Proceeds are sent from the original company to the owner. The
owner then forwards the check to the new company within 60 days.

Partial transfers are allowed.

Please consult a tax advisor for any tax consequences.

These types of transfers are not 1035 exchanges and do not qualify under
IRC Section 1035 guidelines.

A transfer may be qualified or non-qualified.

NOTE: The Home Office is responsible for qualified administration of
IRAs/SEPs only. Other than IRAs, administration of qualified plans is
the responsibility of the customer or plan administrator. The Home
Office does not provide a plan prototype.

- --------------------------------------------------------------------------------
2. Form Requirements

* Annuity Application (form number which is approved in the state of
application)

* Replacement form as required by state, if applicable, and only when
another ANNUITY CONTRACT is being replaced

* External company/institution's contract or lost contract/contract
statement

* Assignment and Transfer Request Form (L6742 Rev. 0300) is the funds are
qualified and the Home Office is to request the funds or if the funds
are non-qualified and coming from a non-insurance/annuity contract and
the Home Office is to request the funds.

* Non-Qualified Funds Transfer Authorization (L 8190) if the funds are
non-qualified and coming from a non-insurance/annuity contract and the
Home Office is to request the funds

* If the plan type is IRA, refer the customer to the IRA disclosure
attached to the prospectus

* If the plan type is SEP, submit IRS Form 5305 with the application

- --------------------------------------------------------------------------------
3. Signature Requirements

The annuitant/proposed owner of the new contract (age 15 or older) must
sign the Annuity Application (if different individuals, both must sign).

The owner must sign the Assignment and Transfer Request Form
(L 6742 Rev 0300).

If the owner is a trust, then the trustee's signature and title are
required on all appropriate forms.

Page 12
<PAGE>

American General Life Insurance Company
Assignment and Transfer Request

<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Trustee/Custodian Telephone Number
- ------------------------------------------------------------------------------------------------------------------------------------
Company's Address: City: State: Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Owner(s): Owner's SSN:
- ------------------------------------------------------------------------------------------------------------------------------------
Annuitant's Name (if different from Owner) Contract/Account No:
- ------------------------------------------------------------------------------------------------------------------------------------
Type of Transfer: (Choose only one)
[ ] 1035 Non-Taxable Exchange [ ] Non-Qualified Transfer [ ] Qualified Rollover [ ] Qualified Direct Transfer
[ ] Other:___________________ (Transfer of funds from non- (Irrevocable Direct Rollover (Direct Transfer from
qualified mutual funds, CDs, of Tax Sheltered Annuities and current IRA trustee or
savings accounts, etc. to a Qualified retirement Plans to custodian company to new
non-qualified Annuity Contract) an IRA) (Forward proceeds to IRA trustee or custodian)
American General within 60 days
to maintain tax status)
- ------------------------------------------------------------------------------------------------------------------------------------
REQUEST FOR 1035 EXCHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
I hereby absolutely assign and transfer to American General Live Insurance Company all of my rights, title, and interest of every
nature in and to the above referenced contract/policy including, but not limited to surrender, assign, transfer, or change
beneficiary.

. Section 1035 of the Internal Revenue Code permits certain nontaxable exchanges of insurance policies and annuity contracts. It is
my intention that this transfer qualify as a Section 1035 exchange and that no portion of this exchange be actually or
constructively received by me. American General Life Insurance Company makes no representation concerning my tax treatment for
this transaction and has neither responsibility nor liability for my tax treatment.
. I understand the exact amount of the proceeds may vary depending upon the date of transfer and I agree to execute any additional
documents required to complete the transfer.
. I understand that the exchange is not complete if the company issuing the contract is unable or unwilling to pay the value of the
above referenced contract(s) to American General Life Insurance Company.
. I understand that as of the date of surrender of the contract by the company, the surrendered contract no longer provides any
coverage and the new contract is not in effect until American General Life approves the new contract and receives the funds.
. I represent and warrant that no person, firm, or corporation has a legal or equitable interest in the contract/policy except the
undersigned, and that no proceedings of either legal or equitable nature have been instituted or are pending against the
undersigned.
The policy/contract is attached
[ ] ENCLOSED Policy/Contract is attached
[ ] LOST OR DESTROYED (I certify that the policy/contract is lost or destroyed. In addition, I certify that the policy/contract
has not been assigned or pledged as collateral.)
- --------------------------------------------------------------------- ----------------------------------------------------------
Owner's Signature(s) Date

American General Life Insurance Company, owner of the above referenced policy, does hereby request immediate surrender of the above
referenced policy or contract.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REQUEST FOR NON-QUALIFIED TRANSFER, QUALIFIED ROLLOVER OR QUALIFIED DIRECT TRANSFER
- ------------------------------------------------------------------------------------------------------------------------------------
This serves as authorization to liquidate and forward:

[ ] All [ ] Partial $______________________________ or ____________________________%
of my account balance as listed above to the annuity I have established through American General Life Insurance Company.
----------------------------------------------------------------------------------------------------
FOR CD TRANSFERS: I am aware that if I request a liquidation of a CD prior to the maturity date, I may be subject to surrender or
withdrawal penalties. I direct and authorize the above liquidation and transfer of the net liquidation proceeds:

[ ] Upon receipt of this request [ ] On the maturity date of _________________________________

- -------------------------------------------------------------------- ---------------------------------------------------------
Owner's Signature(s) Date
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
LETTER OF ACCEPTANCE
- ------------------------------------------------------------------------------------------------------------------------------------
The above named individual has established a Qualified or Non-Qualified Annuity with American General Life Insurance Company. We
will accept the transfer of cash assets currently held in your plan for placement into the Qualified or Non-Qualified Annuity
established with American General Life Insurance Company.

For a Section 1035(a) exchange, please provide us with the pre and post TEFRA cost basis.
By:
------------------------------------------------------------------------------- --------------------------------------------
Authorized Representative of American General Life Insurance Company Date
Checks should be made payable to: American General Life Insurance Company

FBO (For the benefit of) --------------------------------------------
Print Name of Contract Owner(s)

Mail to: Annuity Administration-VADOC Annuity Administration 3-50-VADOC
P.O. Box 1401 or 2727-A Allen Parkway
Houston, TX 77251-1401 overnight Houston, TX 77019
(800) 247-6584 . (713) 831-3701 Fax
Hearing Impaired (888) 436-5257
- ------------------------------------------------------------------------------------------------------------------------------------
Page 13
</TABLE>
L6742 Rev 0300 (replaces forms L8714 & L8190)
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK.]

Page 14
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL") [SELECT RESERVE
Complete and return to: --------------------------------------------- VARIABLE ANNUITY
Annuity Administration A Subsidiary of American General Corporation LOGO]
P.O. Box 1401 ---------------------------------------------
Houston, TX 77251-1401 Houston, Texas
(800) 813-5065
SERVICE REQUEST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[ ] CONTRACT 1.| CONTRACT #:_________________________________________________ ANNUITANT:_______________________________
IDENTIFICATION |
| CONTRACT OWNER(S):_____________________________________________________________________________________
COMPLETE SECTION 1 & 16 |
FOR ALL REQUESTS. | (Name and Address):____________________________________________________________________________________
| [_] Check here if
INDICATE CHANGE OR | change of address.
REQUEST DESIRED BELOW. | S.S. NO. OR TAX I.D. NO.:__________/_________/____________ Phone Number: ( )_____________________
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] NAME 2.| [_] Annuitant* [_] Beneficiary* [_] Owner(s)* (DOES NOT CHANGE ANNUITANT, BENEFICIARY, OR
CHANGE | OWNERSHIP DESIGNATION)
| -------------------------------------------------------------------------------------------------------
| FROM (FIRST, MIDDLE, LAST) TO (FIRST, MIDDLE, LAST)
|
| Reason: [_] Marriage [_] Divorce [_] Correction [_] Other (Attach copy of legal proof)
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] DUPLICATE 3.| I/we hereby certify that the contract for the [_] LOST [_] DESTROYED [_] OTHER______________
CONTRACT | listed number has been:
| Unless I/we have directed cancellation of the contract, I/we request that a Certificate of Lost
| Contract be issued. If the original contract is located, I/we will return the Certificate of Lost
| Contract to AGL to be voided.
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] BENEFICIARY 4.| PRIMARY CONTINGENT
CHANGE |_______________________________________________________________________________________________________
THIS SECTION IS | This change of beneficiary has been approved by AGL at its Home Office, and presentation of the
FOR HOME OFFICE | Contract for endorsement has been waived.
USE ONLY. |
| DATE OF APPROVAL:_________________________________ By:_______________________________________________
| American General Life Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
[_] AUTOMATIC 5.| _________By initialing here, I authorize American General Life to collect $______ (min. $100), starting
ADDITIONAL | on:_______________________ by initialing electronic debit entries against my bank account with the
PREMIUM | MONTH/DAY following frequency.
PAYMENT OPTION |[_] Monthly [_] Quarterly [_] Semiannually [_] Annually (Attach voided check to Service Request.)
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] DOLLAR COST 6.| Dollar cost average [_] $___________ OR [_] _______% (whole % only) Begin Date:______/______/_______
AVERAGING | Taken from the [_] Money Market OR [_] 1-Year Guarantee Period
| FREQUENCY: [_] Monthly [_] Quarterly [_] Semiannually [_] Annually
| DURATION: [_] 12 months [_] 24 months [_] 36 months
| to be allocated to the following division(s) as indicated. (Use only dollars OR percentages.)
| AMERICAN GENERAL SERIES PORTFOLIO COMPANY OFFIT VIF-High Yield (6) __________
| Money Market (13) ____________ OFFIT VIF-Total Return(7) __________
| HOTCHKIS AND WILEY VARIABLE TRUST OFFIT VIF-U.S. Government
| Equity Income VIP (1) ____________ Securities(8) __________
| Low Duration VIP (3) ____________ ROYCE CAPITAL FUND
| LEVCO SERIES TRUST Royce Premier(9) __________
| LEVCO Equity Value (2) ____________ WRIGHT MANAGED BLUE CHIP
| NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. SERIES TRUST
| Navellier Growth (4) ____________ Wright International
| OFFIT VARIABLE INSURANCE FUND, INC. Blue Chip(11) __________
| OFFIT VIF-Emerging Markets (5) ____________ Wright Selected Blue
| Chip(12) __________
| OTHER __________________ __________
- -----------------------------------------------------------------------------------------------------------------------------------
[_] AUTOMATIC 7.| [_] ADD [_] CHANGE automatic rebalancing of variable investments to the percentage allocations
REBALANCING | indicated below:
($25,000 MINIMUM) | [_] Quarterly [_] Semiannually [_] Annually (based on contract anniversary)
| AMERICAN GENERAL SERIES PORTFOLIO COMPANY OFFIT VIF-High Yield (6) __________%
USE WHOLE PERCENTAGES. | Money Market (13) ___________% OFFIT VIF-Total Return(7) __________%
TOTAL MUST EQUAL 100%. | HOTCHKIS AND WILEY VARIABLE TRUST OFFIT VIF-U.S. Government
| Equity Income VIP (1) ___________% Securities(8) __________%
| Low Duration VIP (3) ___________% ROYCE CAPITAL FUND
| LEVCO SERIES TRUST Royce Premier(9) __________%
| LEVCO Equity Value (2) ___________% WRIGHT MANAGED BLUE CHIP
| NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. SERIES TRUST
| Navellier Growth (4) ___________% Wright International
| OFFIT VARIABLE INSURANCE FUND, INC. Blue Chip(11) __________%
| OFFIT VIF-Emerging Markets (5) ___________% Wright Selected Blue
| Chip(12) __________%
| [_] STOP automatic rebalancing. OTHER __________________ __________%
|
| NOTE: Automatic rebalancing is only available for variable divisions. Automatic Rebalancing will
| not change allocation of future purchase payments.
- -----------------------------------------------------------------------------------------------------------------------------------
Page 15

</TABLE>

L 9023 REV 898
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] CHANGE 8.| American General Series Portfolio Company OFFIT VIF-Total Return (7)
ALLOCATION | Money Market (13) ______% OFFIT VIF-U.S. Government Securities (8) ______%
OF FUTURE | Hotchkis and Wiley Variable Trust Royce Capital Fund ______%
PURCHASE | Equity Income VIP (1) ______% Royce Premier (9) ______%
PAYMENTS | Low Duration VIP (3) ______% Wright Managed Blue Chip Series Trust
| LEVCO Series Trust Wright International Blue Chip (11) ______%
USE WHOLE PERCENTAGES. | LEVCO Equity Value (2) ______% Wright Selected Blue Chip (12) ______%
TOTAL MUST EQUAL 100% | Navellier Variable Insurance Series Fund, Inc. Other
| Navellier Growth (4) ______% _______________________________________ ______%
| OFFIT Variable Insurance Fund, Inc. Fixed Account
| OFFIT VIF-Emerging Markets (5) ______% 1-Year Guarantee Period ______%
| OFFIT VIF-High Yield (6) ______%
|
| NOTE: A change to the allocation of future purchase payments will not alter Automatic Rebalancing
| allocations.
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] TRANSFER OF 9.| Indicate division number along with gross dollar or percentage amounts. (Maintain $ or % consistency.)
ACCUMULATED VALUES |
| % or $______ from Div._______ to Div._______ % or $______ from Div._______ to Div._______
|
| % or $______ from Div._______ to Div._______ % or $______ from Div._______ to Div._______
|
| % or $______ from Div._______ to Div._______ % or $______ from Div._______ to Div._______
| NOTE: If a transfer is elected and Automatic Rebalancing is active for your account, you may want
| to consider changing the Automatic Rebalancing allocations (Section 7). Otherwise, the Automatic
| Rebalancing will transfer funds in accordance with instructions on file.
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] TELEPHONE 10.| I (or if Joint Owners, either of us acting independently) hereby authorize American General Life
TRANSFER | Insurance Company ("AGL") to act on telephone instructions to transfer values among the Variable
AUTHORIZATION | Divisions and Fixed Accounts and to change allocations for future purchase payments given by:
|
Complete this section if | (Initial appropriate box(es) below.)
you are applying for or |
revoking current telephone| [ ] Contract Owner(s)
privileges. | [ ] Agent/Registered Representative who is both appointed to represent AGL and with the
| firm authorized to service my contract
|
| AGL and any person designated by this authorization will not be responsible for any claim, loss or
| expense based upon telephone transfer instructions received and acted upon in good faith,
| including losses due to telephone instruction communication errors. AGL's liability for erroneous
| transfers, unless clearly contrary to instructions received, will be limited to
| correction of the allocations on a current basis. If an error, objection or other claim arises due to a
| telephone transaction, I will notify AGL in writing within five working days from the receipt of the
| confirmation of the transaction from AGL. I understand that this authorization is subject to the terms
| and provisions of my SELECT RESERVE contract and its related prospectus. This authorization will
| remain in effect until my written notice of its revocation is received by AGL at its main office.
|
| [ ] CHECK HERE TO DECLINE TELEPHONE TRANSFER PRIVILEGE.
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] SYSTEMATIC 11.| Specified Dollar Amount $________________ FREQUENCY: [ ] Monthly [ ] Quarterly [ ] Semiannually
WITHDRAWAL | [ ] Annually
(Also Complete |
Sec. 15) | To begin on ______/_______/_______ (Date must be between the 5TH and 24TH of the month and at least
($100 MINIMUM WITHDRAWAL) | MM DD YY 30 days after issue date.)
| Unless specified below, withdrawals will be taken from the divisions as they are currently allocated
PERCENTAGES (WHOLE % ONLY) | in your contract.
MUST EQUAL 100%, OR |
DOLLARS MUST EQUAL TOTAL | $ or %________ Div. No.________ $ or %________ Div. No.________ $ or %________ Div. No._______
AMOUNT. |
| $ or %________ Div. No.________ $ or %________ Div. No.________ $ or %________ Div. No._______
|
| $ or %________ Div. No.________ $ or %________ Div. No.________ $ or %________ Div. No._______
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] REQUEST FOR 12.| Amount requested is to be ( ) NET OR ( ) gross of applicable charges. Total Amount = $________
PARTIAL |
WITHDRAWAL | $ or %________ Div. No.________ $ or %________ Div. No.________ $ or %________ Div. No._______
(Also Complete
Sec. 15.) | $ or %________ Div. No.________ $ or %________ Div. No.________ $ or %________ Div. No._______
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] REQUEST FOR 13.| [ ] Contract attached
FULL |
SURRENDER | [ ] I hereby declare that the contract specified above has been lost, destroyed, or misplaced and
(Also Complete | request that the value of the contract be paid. I agree to indemnify and hold harmless AGL
Sect. 15) | against any claims which may be asserted on my behalf and on the behalf of my heirs, assignees,
| legal representatives, or any other person claiming rights derived through me against AGL on the
| basis of the contract.
- -----------------------------------------------------------------------------------------------------------------------------------
[ ] ALTERNATE 14.| Check(s) will be made payable to the Contract Owner(s) and mailed to the Owner's address of record
PAYEE | unless specified otherwise below:
|
| _______________________________________________________ ___________________________________________
| NAME OF INDIVIDUAL OR FINANCIAL INSTITUTION ACCOUNT NUMBER (IF APPLICABLE)
|
| ______________________________________________________________________________________________________
| ADDRESS CITY STATE ZIP
- ---------------------------|--------------------------------------------------------------------------------------------------------
[ ] NOTICE OF 15.| The taxable portion of the distribution you receive from your annuity contract is subject to federal
WITHHOLDING | income tax withholding unless you elect not to have withholding apply. Withholding of state
| income tax may also be required by your state of residence. You may elect not to have withholding
| apply by checking the appropriate box below. If you elect not to have withholding apply to your
| distribution or if you do not have enough income tax withheld, you may be responsible for payment
| of estimated tax. You may incur penalties under the estimated tax rules, if your withholding
| and estimated tax are not sufficient.
|
| Check one: [ ] I do NOT want income tax withheld from this distribution.
|
| [ ] I do want 10% or _________% income tax withheld from this distribution.
- ------------------------------------------------------------------------------------------------------------------------------------
[X] AFFIRMATION/ 16.| CERTIFICATION: Under penalties of perjury, I certify: (1) that the number shown on this form is my
SIGNATURE | correct taxpayer identification number and; (2) that I am not subject to backup withholding under
| Section 3406(a)(1)(C) of the Internal Revenue Code.
|
| The Internal Revenue Service does not require your consent to any provision of this document other than
| the certification required to avoid backup withholding.
|
|
| __________________________________________________ ______________________________________________
| DATE SIGNATURE(S) OF OWNER(S)
|
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

L 9023 REV 898
Page 16

<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY
A Subsidiary of American General Corporation
P.O. Box 4373 . Houston, Texas 77210
[AMERICAN GENERAL LOGO]

- CHANGE OF BENEFICIARY -
(Before completing this form
please read instructions below and on reverse side.)

<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
POLICY NO. INSURED
- ------------------------------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT: The death proceeds shall be payable in equal shares to the designated beneficiaries as may be living, unless
otherwise provided below. In the event no beneficiary survives the Insured, and if this form, or the Policy does not provide
otherwise, the proceeds will be paid to the policyowner, or the executors or administrators of the policyowner's Estate.
- ------------------------------------------------------------------------------------------------------------------------------------
PRIMARY BENEFICIARY:

Full Name Relationship to Annuitant Percentages (if applicable)
- --------- ------------------------- ---------------------------

- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
If a living or non-testamentary trust is designated as a primary beneficiary, complete the following:

____________________________________________________________________________________________ Dated: _________________________
Name of Trust

CONTINGENT BENEFICIARY (proceeds payable under this designation only if none of the designated primary beneficiaries survives the
Insured):

Full Name Relationship to Annuitant Percentages (if applicable)
- --------- ------------------------- ---------------------------

- ------------------------------------------------------------------------------------------------------------------------------------

____________________________________________________________________________________________ Dated: _________________________
Name of Trust

- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONAL CLAUSES - one or more of the following may be checked if desired:

[_] MINOR BENEFICIARY CLAUSE - TRUSTEE FOR CHILDREN

Full Name Relationship to Insured

- ------------------------------------------------------------------------------------------------------------------------------------
is hereby appointed as trustee to receive any payment due on or after the Insured's death to any beneficiary who is a minor
child on the date such payment falls due. Payment by the Company to such trustee shall be an absolute and complete release and
acquittance of the Company which shall not be held accountable or responsible for the use and application of the death benefit
proceeds paid to such trustee.

[_] CHILDREN'S CLAUSE - PER STIRPES

If a child of the Insured who is designated in this form as a beneficiary predeceases the Insured, leaving children who survive
the Insured, then the shares such deceased beneficiary would have received had such beneficiary survived the Insured shall be
payable in equal shares to the surviving children of such deceased beneficiary.

[_] POSTPONEMENT CLAUSE - COMMON DISASTER
In no case shall any payment be made to any beneficiary designated in this form until; thirty (30) days have elapsed following
the Insured's death, and in the event of the death of a beneficiary during such period, payment shall be made in the same
manner as provided in this form, had the said beneficiary predeceased the Insured. This provision does not apply to a Trustee.
====================================================================================================================================
The undersigned policyowner hereby revokes any previous beneficiary designation and any optional mode of settlement with respect to
any death benefit proceeds payable at the death of the Insured.

I represent and certify that no insolvency or bankruptcy proceedings are now pending against me.

Dated at ______________________________________ this __________________________ day of ___________________

_______________________________________ __________________________________________________
POLICYOWNER Additional Signature if Required
====================================================================================================================================
This change of beneficiary and/or method of settlement has been approved by the Company at its Home Office, and presentation of the
Policy for endorsement has been waived.

AMERICAN GENERAL LIFE INSURANCE COMPANY

DATE OF APPROVAL:____________________________________________ BY:________________________________________________________

Page 17
</TABLE>

<PAGE>

INSTRUCTIONS FOR DESIGNATING BENEFICIARY
<S> <C>
1. All signatures must be in INK and should appear exactly as the name is given in the policy. A separate election for change of
beneficiary must be completed for each policy. If the policy insures more than one life (e.g. - Family Plan, Joint Life, etc.)
specify the Insured for whom a change is desired.

2. The full name of the new Beneficiary, relationship to the Insured and current mailing address should be given for all
Beneficiaries. If Beneficiary is to receive payment under life income option, give date of birth.

3. If a Beneficiary is a married woman, her full given name should be used. For example, Mary E. Jones, not Mrs. J.F. Jones.If a
Trustee is designated, notification as to the type of trust created should be furnished to the Company.

4. If two Beneficiaries are to share jointly, the last name entered should be followed by the words "equally, or to the survivor;"
if three or more Beneficiaries are to share jointly, the last name entered should be followed by the words "equally, or to the
survivors or survivor." If the interest of one Beneficiary is to be contingent to the interest of another, after the name of the
first Beneficiary the following words should be placed: "if living; otherwise to."

For your assistance, examples of the wording to be used in some of the more common designations are set out below. In difficult
cases where there is doubt as to the proper wording, the Company will prepare a special form for your signature on request.

1. One Beneficiary Jane Doe, wife of the Insured.

2. Two Primary Beneficiaries Jane Doe, wife of the Insured, and John Doe, son, equally, or to the
survivor.

3. One Primary and Two Contingent Beneficiaries Jane Doe, wife of the Insured, if living; otherwise to John
Doe and Mary Doe, children of the Insured, equally, or to the
survivor.

4. One Primary and One Contingent Beneficiary Jane Doe, wife of the Insured, if living; otherwise to John Doe, son.

5. Two Primary and One Contingent Beneficiaries John Doe and Mary Doe, parents of the Insured, equally,
or to the survivor; otherwise, to Jane Doe, sister of the Insured.
6. Wife, Primary; Named and Unnamed Children, Jane Doe, wife of the Insured, if living; otherwise to Henry Doe,
Contingent Beneficiaries Barbara Doe, and Paul Doe, children of the Insured, and any other
then living children born of the marriage of the Insured and said
wife, equally, or to the survivors.

7. Wife, Primary; Children and Step-Children Mary Doe, wife of the Insured, if living; otherwise, Henry Doe, son
Contingents of the Insured, Mary Doe, step-daughter of the Insured, and any
then living children born of the marriage of the Insured and said
wife, equally, or to the survivor.

8. Wife, Primary; Unnamed Children with Jane Doe, wife of the Insured, if living; otherwise any then living
Second Contingents children born of the marriage of the Insured and said wife, equally,
or to the survivor; otherwise to Harry Doe and Mabel Doe, parents of
the Insured, equally, or to the survivor.

9. Business Designations A. The Beacon Oil Company, Incorporated, a Texas Corporation Houston,
Texas, employer (or creditor), or its successors or assigns.

B. John Doe, Business Partner.

C. Harry Doe, Employer (or employee).

10. Trustee - Written Trust The American General Bank, Houston, Texas, as Trustee, or its
successors in Trust, under Trust Instrument dated May 31, 1995.

Trustee - Testamentary Trust Trustee as provided in the Last Will and Testament of the Insured,
or successors thereunder.

11. Estate The Executors, Administrators, or Assigns of the Insured.
</TABLE>

Page 18

<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

A Subsidiary of American General Corporation

Houston, Texas

SELECT RESERVE
Variable Annuity

To Obtain a Statement of Additional Information, please complete the form below
and mail to:

American General Life Insurance Company
Attn: Annuity Correspondence Unit
P.O. Box 1401
Houston, TX 77251-1401

Please send a Statement of Additional Information for the SELECT RESERVE
Variable Annuity to me at the following address:

- --------------------------------
Name

- --------------------------------
Address

- --------------------------------
City/State Zip Code

Page 19
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 20
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT D

SELECT RESERVE(SM)

FLEXIBLE PAYMENT VARIABLE AND
FIXED INDIVIDUAL DEFERRED ANNUITY CONTRACTS

OFFERED BY

AMERICAN GENERAL LIFE INSURANCE COMPANY
ANNUITY ADMINISTRATION DEPARTMENT

P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-813-5065; 713-831-3505

STATEMENT OF ADDITIONAL INFORMATION

Dated April 3, 2000

This Statement of Additional Information ("Statement") is not a prospectus. You
should read it with the Prospectus for American General Life Insurance Company
Separate Account D (the "Separate Account"), dated April 3, 2000, concerning
flexible payment variable and fixed individual deferred annuity Select
Reserve(SM) contracts (the "Contracts"). The Separate Account invests in
certain Series of the:

. American General Series Portfolio Company,

. Hotchkis and Wiley Variable Trust,

. LEVCO Series Trust,

. Navellier Variable Insurance Series Fund, Inc.,

. OFFIT Variable Insurance Fund, Inc.
(formerly known as OFFITBANK Variable Insurance Fund, Inc.),

. Royce Capital Fund, and

. Wright Managed Blue Chip Series Trust.

You can obtain a copy of the Prospectus for the Contracts and any Prospectus
supplements by contacting American General Life Insurance Company ("AGL") at the
address or telephone numbers given above. You have the option of receiving
benefits on a fixed basis through AGL's Fixed Account or on a variable basis
through AGL's Separate Account. Terms have the same meaning in this Statement
that they do in the Prospectus under the heading "Definitions."

1
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S> <C>
General Information 2

Regulation and Reserves 2

Independent Auditors 4

Services 4

Principal Underwriter 4

Annuity Payments 4
Gender of Annuitant 4
Misstatement of Age or Gender and Other Errors 5

Change of Investment Adviser or Investment Policy 5

Performance Data for the Divisions 5
Average Annual Total Return Calculations 5
Cumulative Total Return Calculations 6
Hypothetical Performance 7
Money Market Division Yield and Effective Yield Calculations 9
Performance Comparisons 9

Effect of Tax-deferred Accumulation 10

Financial Statements 11

Index to Financial Statements 12
</TABLE>

GENERAL INFORMATION

AGL (formerly American General Life Insurance Company of Delaware) is a
successor in interest to a company previously organized as a Delaware
corporation in 1917. AGL redomesticated as a Texas insurer effective December
31, 1991 and changed its name to American General Life Insurance Company. AGL
is a wholly-owned subsidiary of AGC Life Insurance Company, a Missouri
corporation ("AG Missouri"). It is engaged primarily in the life insurance
business and annuity business. AG Missouri, in turn, is a wholly-owned
subsidiary of American General Corporation, a Texas holding corporation engaged
primarily in the insurance business.

REGULATION AND RESERVES

AGL is subject to regulation and supervision by the insurance departments of the
states where it is licensed to do business. This regulation covers a variety of
areas, including:

. benefit reserve requirements,

. adequacy of insurance company capital and surplus,

2
<PAGE>

. various operational standards, and

. accounting and financial reporting procedures.

AGL's operations and accounts are subject to periodic examination by insurance
regulatory authorities.

Under most insurance guaranty fund laws, a state can assess insurers doing
business in the state for covered insurance contract losses incurred by
insolvent companies. State laws set limits for these assessments. However, AGL
cannot reasonably estimate the amount of any future assessments of AGL under
these laws. Most states have the authority to excuse or defer an assessment, if
it would threaten an insurer's own financial strength. The Account Value held
in the Separate Account may not be covered by insurance guaranty fund laws. The
Account Value held in the Fixed Account is covered by the insurance guaranty
fund laws.

The federal government generally has not directly regulated the business of
insurance. However, federal initiatives often have an impact on the business in
a variety of ways. Federal measures that may adversely affect the insurance
business include:

. employee benefit regulation,

. tax law changes affecting the taxation of insurance companies or of
insurance products,

. changes in the relative desirability of various personal investment
vehicles, and

. removal of impediments on the entry of banking institutions into the
business of insurance.

Also, both the executive and legislative branches of the federal government are
considering various insurance regulatory matters. This could ultimately result
in direct federal regulation of some aspects of the insurance business. AGL
cannot predict whether this will occur or, if it does, what the effect on AGL
would be.

State insurance law requires AGL to carry reserves on its books, as liabilities,
to meet its obligations under outstanding insurance contracts. AGL bases these
reserves on assumptions about future claims experience and investment returns,
among other things.

Neither the reserve requirements nor the other aspects of state insurance
regulation provide absolute protection to holders of insurance contracts,
including the Contracts, if AGL were to incur claims or expenses at rates
significantly higher than expected. This might happen, for example, due to a
spread of acquired immune deficiency syndrome or other infectious diseases or
catastrophes, or significant unexpected losses on its investments.

3
<PAGE>

INDEPENDENT AUDITORS

The 1999 consolidated financial statements of AGL and the financial statements
of the Select Reserve Divisions of Separate Account D included in this Statement
were audited by Ernst & Young LLP, independent auditors, as set forth in their
report. We include these financial statements in this Statement in reliance
upon the report of Ernst & Young LLP that appears later on in this Statement.
Ernst & Young LLP gives its report upon their authority as experts in accounting
and auditing. Ernst & Young LLP is located at One Houston Center, 1221
McKinney, Suite 2400, Houston, TX 77010-2007.

SERVICES

AGL and American General Life Companies ("AGLC") are parties to a services
agreement. Most of the affiliated companies within the American General
Corporation holding company system, including certain life insurance companies,
are also parties to the agreement. AGLC is a corporation incorporated in
Delaware on November 24, 1997, with its home office located at 2727-A Allen
Parkway, Houston, Texas 77019. AGLC provides shared services to AGL and certain
other life insurance companies at cost. These services include data processing,
systems, customer services, product development, actuarial, auditing,
accounting, and legal. AGL did not pay any fees to AGLC in 1997, because AGLC
performed no services under the agreement. AGL paid AGLC $70,431,229 in 1998
and $63,794,324 in 1999.

PRINCIPAL UNDERWRITER

American General Securities Incorporated ("AGSI") is the principal underwriter
for the Contracts. AGSI also serves as principal underwriter to AGL's Separate
Account A and Separate Account VL-R, to Separate Account E of American General
Life Insurance Company of New York, and to Separate Account USL VA-R and
Separate Account USL VL-R of The United States Life Insurance Company in the
City of New York. All of these other separate accounts are unit investment
trusts registered under the Investment Company Act of 1940. AGSI, a Texas
corporation, is a wholly-owned subsidiary of AGL and a member of the National
Association of Securities Dealers, Inc.

As principal underwriter for the Separate Account, AGSI has not received any
compensation from AGL for any of the last three years.

AGL offers the securities under the Contracts on a continuous basis.

ANNUITY PAYMENTS

GENDER OF ANNUITANT

When annuity payments are based on life expectancy, the amount of each annuity
payment ordinarily will be higher if the Annuitant or other measuring life is a
male, as compared with a female, under an otherwise identical Contract. This is
because, statistically, females tend to have longer life expectancies than
males.

4
<PAGE>

However, Montana, and certain other jurisdictions, do not permit differences in
annuity payment rates between males and females.

In addition, employers should be aware that, under most employer-sponsored
plans, the law prohibits contracts that make distinctions based on gender.
Under these plans, AGL will make available Contracts with no such differences.

MISSTATEMENT OF AGE OR GENDER AND OTHER ERRORS

If the age or gender of an Annuitant has been misstated to us, any amount
payable will be the amount that the purchase payments paid would have purchased
at the correct age and gender. If we made any overpayments because of incorrect
information about age or gender or any error or miscalculation, we will deduct
the overpayment from the next payment or payments due. We will add any
underpayments to the next payment. We will credit or charge the amount of any
adjustment with interest at the assumed interest rate used in the Contract's
annuity tables.

CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY

Unless otherwise permitted by law or regulation, no Series may change the
investment adviser to any Series or any investment policy without the consent of
the shareholders. If required, we will file approval of or change of any
investment objective with the insurance department of each state where a
Contract has been delivered. We will notify you (or, after annuity payments
start, the payee) of any material investment policy change that we have
approved. We will also notify you of any investment policy change before its
implementation by the Separate Account, if the change requires your comment or
vote.

PERFORMANCE DATA FOR THE DIVISIONS

We may quote investment results for the available Divisions of Separate Account
D from time to time. These results will not be an estimate or guarantee of
future investment performance. Nor will they represent the actual experience of
amounts invested by a particular Owner. We will carry performance figures to
the nearest one-hundredth of one percent. We may include in the figures the
effect of voluntary fee waivers and expense reimbursements to the Funds from
their investment adviser and administrator.

AVERAGE ANNUAL TOTAL RETURN CALCULATIONS

Each Division may advertise its average annual total return. We calculate each
Division's average annual total return quotation under the following standard
method that the Securities and Exchange Commission ("SEC") prescribes:

. We take a hypothetical $1,000 investment in the Division's
Accumulation Units on the first day of the period at the maximum
offering price. This figure is the Accumulation Unit Value per unit
("initial investment").

. We calculate the ending redeemable value ("redeemable value") of that
investment at the end of the period. The redeemable value reflects the
effect of (1) any applicable Surrender Charge

5
<PAGE>

at the end of the period and (2) all other recurring charges and fees
applicable under the Contract to all Owner accounts. Other charges and
fees include the Mortality and Expense Risk Charge, the Administrative
Expense Charge, and the Annual Contract Fee. We do not reflect any
premium taxes in the calculation.

. We divide the redeemable value by the initial investment.

. We take this quotient to the Nth root (N representing the number of
years in the period), subtract 1 from the result, and express the
result as a percentage.

Average annual total return quotations for the Divisions for the period ended
December 31, 1999 are shown in the table below.

<TABLE>
<CAPTION>
SINCE DIVISION
INVESTMENT DIVISION 1-YEAR/1/ INCEPTION/2/
- ----------------------------- ----------- ---------------------
<S> <C> <C>
Hotchkis and Wiley Equity Income VIP (3.11)% (5.89)%
Hotchkis and Wiley Low Duration VIP 2.29% 3.15%
LEVCO Equity Value 15.26% 10.72%
Navellier Growth 91.89% 55.48%
OFFIT VIF-Emerging Markets /3/ 24.52% 8.34%
OFFIT VIF-High Yield /3/ (1.18)% (0.61)%
OFFIT VIF-Total Return /3/ (2.66)% (0.88)%
OFFIT VIF-U. S. Government Securities/3, 4/ N/A (1.19)%
Royce Premier 7.79% 2.09%
Wright International Blue Chip 31.59% 18.25%
Wright Selected Blue Chip 13.51% 3.99%
Money Market 4.33% 4.20%
</TABLE>
- --------------------------

/1/ One year return quotations show only for those Divisions which commenced
operations before January 1, 1999.

/2/ The dates when the Divisions commenced operations are as follows: the
Hotchkis and Wiley Equity Income VIP, LEVCO Equity Value, Navellier Growth, and
Royce Premier, May 14, 1998; the Wright International Blue Chip and Wright
Selected Blue Chip Divisions, June 22, 1998; the Hotchkis and Wiley Low Duration
VIP and OFFIT VIF-Total Return Divisions, June 29, 1998; the Money Market
Division, July 30, 1998; the OFFIT VIF-Emerging Markets and OFFIT VIF-High Yield
Divisions, August 18, 1998; the OFFIT VIF-U.S. Government Securities Division,
March 31, 1999.

/3/ Effective October 20, 1999, the OFFITBANK VIF-Emerging Markets Fund, the
OFFITBANK VIF-High Yield Fund, the OFFITBANK VIF-Total Return Fund, and the
OFFITBANK VIF-U.S. Government Securities Fund, respectively, changed their names
to the OFFIT VIF-Emerging Markets Fund, the OFFIT VIF-High Yield Fund, the OFFIT
VIF-Total Return Fund, and the OFFIT VIF-U.S. Government Securities Fund.

/4/ The OFFIT VIF-U.S. Government Securities Division originally commenced
operations on August 21, 1998. The Division had no assets allocated to it and
no activity during the period of September 24, 1998 through March 31, 1999. We
use March 31, 1999 as the commencement of operations date for the Division.

CUMULATIVE TOTAL RETURN CALCULATIONS

Each Division may also advertise cumulative total return performance.
Cumulative total return performance is the compound rate of return on a
hypothetical initial investment of $1,000 in each Division's Accumulation Units
on the first day of the period at the maximum offering price. This figure is
the Accumulation Unit value per unit ("initial investment"). Cumulative total
return figures

6
<PAGE>

(and the related "Growth of a $1,000 Investment" figures set forth below) do not
include the effect of any premium taxes. Cumulative total return figures reflect
changes in Accumulation Unit value. We calculate these quotations by finding the
cumulative rates of return of the hypothetical initial investment over various
periods, according to the following formula, and then expressing those rates as
a percentage:

C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value at the end of the applicable period of a
hypothetical $1,000 investment made at the beginning of the
applicable period.

HYPOTHETICAL PERFORMANCE

Each Division may advertise hypothetical performance, based on the calculations
described above, where all or a portion of the actual historical performance of
the corresponding Series in which the Division invests pre-dates the effective
date of the Division. The tables below provide hypothetical performance
information for the available Divisions of the Separate Account based on the
actual historical performance of the corresponding Series in which each of these
Divisions invests. This information reflects all actual charges and deductions
of these Series and the Separate Account that hypothetically would have been
made if the Separate Account invested assets under the Contracts in these Series
for the periods indicated.

Hypothetical Historical Average Annual Total Returns
(Through December 31, 1999)

Since
Series
Investment Division One Year/1/ Five Years/1/ Ten Years/1/ Inception/1, 2/
- --------------------------------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP (3.11)% N/A N/A (5.55)%
Hotchkis and Wiley Low Duration VIP 2.02% N/A N/A 3.28%
LEVCO Equity Value 15.26% N/A N/A 10.72%
Navellier Growth 91.89% N/A N/A 51.21%
OFFIT VIF-Emerging Markets 24.52% N/A N/A 4.80%
OFFIT VIF-High Yield (1.18)% N/A N/A 6.30%
OFFIT VIF-Total Return (2.66)% N/A N/A (0.88)%
OFFIT VIF-U.S. Gov. Securities N/A N/A N/A (1.19)%
Royce Premier 7.79% N/A N/A 11.03%
Wright International Blue Chip 31.70% 13.69% N/A 9.56%
Wright Selected Blue Chip 13.60% 17.25% N/A 12.88%
Money Market 4.33% 4.49% 4.21% N/A
</TABLE>

(See footnotes on next page)

7
<PAGE>

Hypothetical Historical Cumulative Total Returns
(Through December 31,1999)

Since
Series
Investment Division One Year/1/ Five Years/1/ Ten Years/1/ Inception/1, 2/
- --------------------------------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Hotchkis and Wiley Equity Income VIP (3.11)% N/A N/A (9.71)%
Hotchkis and Wiley Low Duration VIP 2.02% N/A N/A 5.95%
LEVCO Equity Value 15.26% N/A N/A 18.09%
Navellier Growth 91.89% N/A N/A 114.11%
OFFIT VIF-Emerging Markets 24.52% N/A N/A 16.95%
OFFIT VIF-High Yield (1.18)% N/A N/A 25.71%
OFFIT VIF-Total Return (2.66)% N/A N/A (1.33)%
OFFIT VIF-U.S. Gov. Securities N/A N/A N/A (0.90)%
Royce Premier 7.79% N/A N/A 37.02%
Wright International Blue Chip 31.70% 90.03% N/A 72.78%
Wright Selected Blue Chip 13.60% 121.74% N/A 106.63%
Money Market 4.33% 24.57% 51.02% N/A
</TABLE>

Hypothetical Historical Growth of a $1,000 Investment in the Divisions
(Through December 31, 1999)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year/1/ Five Years/1/ Ten Years/1/ Inception/1, 2/
- --------------------------------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>

Hotchkis and Wiley Equity Income VIP $ 969 N/A N/A $ 903
Hotchkis and Wiley Low Duration VIP $1,020 N/A N/A $1,060
LEVCO Equity Value $1,153 N/A N/A $1,181
Navellier Growth $1,919 N/A N/A $2,141
OFFIT VIF-Emerging Markets $1,245 N/A N/A $1,169
OFFIT VIF-High Yield $ 988 N/A N/A $1,257
OFFIT VIF-Total Return $ 973 N/A N/A $ 987
OFFIT VIF-U.S. Gov. Securities N/A N/A N/A $ 991
Royce Premier $1,078 N/A N/A $1,370
Wright International Blue Chip $1,317 $1,900 N/A $1,728
Wright Selected Blue Chip $1,136 $2,217 N/A $2,066
Money Market $1,043 $1,246 $1,510 N/A
</TABLE>

- --------------------------

/1/ "N/A" reflects SEC rules that require us to show information for no more
than ten years.

/2/ The inception dates for each Series funding the Divisions listed above are:
Money Market, January 16, 1986; Wright International Blue Chip and Wright
Selected Blue Chip, January 5, 1994; OFFIT VIF-High Yield, April 4, 1996; OFFIT
VIF-Emerging Markets, August 28, 1996; Royce Premier, December 27, 1996; LEVCO
Equity Value, August 4, 1997; Hotchkis and Wiley Equity Income VIP, and
Navellier Growth May 14, 1998; Hotchkis and Wiley Low Duration VIP and OFFIT
VIF-Total Return, June 29, 1998; OFFIT VIF-U.S. Government Securities, March 31,
1999.

8
<PAGE>

MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS

We calculate the Money Market Division's yield for which we use a standard
method that the SEC prescribes. Under that method, we base the current yield
quotation on a seven-day period and calculate that yield as follows:

. We take the net change in the Accumulation Unit value during the period.

. We divide that net change by the Accumulation Unit value at the beginning
of the period to obtain the base period return.

. We multiply the base period return by the fraction 365/7 to obtain the
current yield figure.

. We carry the current yield figure to the nearest one-hundredth of one
percent.

We do not include realized capital gains or losses and unrealized appreciation
or depreciation of the Division's Portfolio in the calculation. The Money
Market Division's hypothetical historical yield for the seven-day period ended
December 31, 1999 was 4.31%.

We determine the Money Market Division's effective yield by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: (base period
return +1)/365/7/ -1. The Money Market Division's hypothetical historical
effective yield for the seven day period ended December 31, 1999 was 4.41%.

Yield and effective yield do not reflect the deduction of premium taxes that
may be imposed upon the redemption of Accumulation Units.

PERFORMANCE COMPARISONS

In our advertising and sales literature, we may compare the performance of each
or all of the available Divisions of the Separate Account to the performance of
(1) other variable annuities in general or (2) particular types of variable
annuities that invest in mutual funds, or series of mutual funds, with
investment objectives similar to each of the Divisions of the Separate Account.

Lipper Analytical Services, Inc. ("Lipper") and the Variable Annuity Research
and Data Service ("VARDS(R)") are independent services that monitor and rank
the performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. Lipper's rankings include
variable life insurance issuers as well as variable annuity issuers. VARDS(R)
rankings compare only variable annuity issuers. The performance analyses
prepared by Lipper and VARDS(R) rank such issuers on the basis of total
return. Total return assumes the reinvestment of dividends and distributions,
but does not take into consideration sales charges, redemption fees or certain
expense deductions at the separate account level. In addition, VARDS(R)
prepares risk-adjusted rankings, which consider the effects of market risk on
total return performance.

9
<PAGE>

In addition, we may compare each Division's performance in advertisements and
sales literature to the following benchmarks:

. the Standard & Poor's 500 Composite Stock Price Index, an unmanaged
weighted index of 500 leading domestic companies that represents
approximately 80% of the market capitalization of the United States equity
market;

. the Dow Jones Industrial Average, an unmanaged unweighted average of 30
blue chip industrial corporations listed on the New York Stock Exchange
and generally considered representative of the United States stock market;

. the Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, a statistical measure of change, over time, in the prices of
goods and services in major spending groups and generally is considered to
be a measure of inflation;

. the Lehman Brothers Government and Domestic Strategic Income Index, the
Salomon Brothers High Grade Domestic Strategic Income Index, and the
Merrill Lynch Government/Corporate Master Index, unmanaged indices that
are generally considered to represent the performance of intermediate and
long term bonds during various market cycles; and

. the Morgan Stanley Capital International Europe Australasia Far East
Index, an unmanaged index that is considered to be generally
representative of major non-United States stock markets.

EFFECT OF TAX-DEFERRED ACCUMULATION

The Contracts qualify for tax-deferred treatment on earnings. This tax-deferred
treatment increases the amount available for accumulation by deferring taxes on
any earnings until the earnings are withdrawn. The longer the taxes are
deferred, the more the potential you have for the assets under your Contract to
grow over the term of the Contracts.

The hypothetical tables set out below illustrate this potential. The tables
compare accumulations based on a single initial purchase payment of $100,000
compounded annually under:

. a Contract, under which earnings are not taxed until withdrawn in
connection with a full surrender, partial withdrawal, or annuitization, or
termination due to insufficient Account Value ("withdrawal of earnings")
and

. an investment under which earnings are taxed on a current basis ("Taxable
Investment"), based on an assumed tax rate of 28%, and the assumed earning
rates specified.

10
<PAGE>

<TABLE>
<CAPTION>
5 Years 10 Years 20 Years
------- ------- --------
<S> <C> <C> <C>
(7.50% earnings rate)
Contract $143,563 $206,103 $424,785
Contract (after Taxes) $131,365 $176,394 $333,845
Taxable Investment $130,078 $169,202 $286,294

(10.00% earnings rate)
Contract $161,051 $259,374 $672,750
Contract (after Taxes) $143,957 $214,749 $512,380
Taxable Investment $141,571 $200,423 $401,694
</TABLE>

The hypothetical tables do not reflect any fees or charges under a Contract or
Taxable Investment. However, the Contracts impose:

. a Mortality and Expense Risk Charge of 0.36%, and

. an Administrative Expense Charge of 0.04%.

A Taxable Investment could incur comparable fees or charges. Fees and charges
would reduce the return from a Contract or Taxable Investment.

Under the Contracts, a withdrawal of earnings is subject to tax, and may be
subject to an additional 10% tax penalty before age 59 1/2.

These tables are only illustrations of the effect of tax-deferred accumulations
and are not a guarantee of future performance.

FINANCIAL STATEMENTS

Separate Account D has 68 Divisions as of the date of this Statement. Twelve
Divisions (the "Select Reserve Divisions") are available under the Contracts
that are the subject of this Statement. The December 31, 1999 financial
statements for the Select Reserve Divisions which are included in this statement
relate only to these 12 Divisions. The remaining 56 Divisions had operations as
of December 31, 1999 and are offered under other AGL contracts.

You should consider the financial statements of AGL that we include in this
Statement primarily as bearing on the ability of AGL to meet its obligations
under the Contracts.

11
<PAGE>

INDEX TO
FINANCIAL STATEMENTS

Page No.
--------

I. Separate Account D Financial Statements

Report of Ernst & Young LLP, Independent Auditors.................... D-1

Statement of Net Assets for the year ended December 31, 1999......... D-2

Statement of Operations for the year ended December 31, 1999......... D-2

Statement of Changes in Net Assets for the years ended
December 31, 1999 and 1998....................................... D-3

Notes to Financial Statements....................................... D-4

II. AGL Consolidated Financial Statements

Report of Ernst & Young LLP, Independent Auditors.................... F-1

Consolidated Balance Sheets as of December 31, 1999 and 1998......... F-2

Consolidated Income Statements for the years ended
December 31, 1999, 1998 and 1997................................. F-4

Consolidated Statements of Comprehensive Income for the years ended
December 31, 1999, 1998 and 1997................................. F-5

Consolidated Statements of Shareholder's Equity for the years ended
December 31, 1999, 1998 and 1997................................. F-6

Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997................................. F-7

Notes to Consolidated Financial Statements......................... F-8

12
<PAGE>

[LETTER HEAD OF ERNST & YOUNG APPEARS HERE]

Report of Independent Auditors

Board of Directors
American General Life Insurance Company
and
Contract Owners
American General Life Insurance Company
Select Reserve Divisions
of Separate Account D

We have audited the accompanying statement of net assets of the Select Reserve
Divisions of American General Life Insurance Company (the "Company") Separate
Account D as of December 31, 1999, the related statement of operations for the
year then ended, and the statement of changes in net assets for each of
the two years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the transfer agents. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Select Reserve Divisions of
American General Life Insurance Company Separate Account D at December 31, 1999,
the results of its operations for the year then ended, and the changes in its
net assets for each of the two years in the period then ended, in conformity
with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Houston, Texas
February 7, 2000

D-1
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

SELECT RESERVE DIVISIONS

SEPARATE ACCOUNT D

STATEMENT OF NET ASSETS
DECEMBER 31, 1999

ASSETS:
Investment securities - at market (cost $58,358,261)... $56,868,688
Due from American General Life Insurance Company....... 907
-----------
NET ASSETS.......................................... $56,869,595
===========
CONTRACT OWNER RESERVES:
Reserves for redeemable annuity contracts.............. $56,869,595
-----------
TOTAL CONTRACT OWNER RESERVES....................... $56,869,595
===========

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999

INVESTMENT INCOME:
Dividends from mutual funds........................... $ 3,306,848

EXPENSES:
Expense and mortality fees............................ (162,230)
-----------
NET INVESTMENT INCOME.............................. 3,144,618
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments...................... (251,499)
Capital gain distributions from mutual funds.......... 563,052
Net unrealized loss on investments.................... (1,196,157)
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS.... (884,604)
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 2,260,014
===========

SEE ACCOMPANYING NOTES.

D-2
<PAGE>

AMERICAN GENERAL LIFE INSURANCE COMPANY

SELECT RESERVE DIVISIONS

SEPARATE ACCOUNT D

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
<S> <C> <C>
OPERATIONS:
Net investment income............................................. $ 3,144,618 $ 12,940
Net realized loss on investments.................................. (251,499) (59,405)
Capital gain distributions from mutual funds...................... 563,052 5,259
Net unrealized loss on investments................................ (1,196,157) (293,417)
----------- -----------
Increase in net assets resulting from operations............... 2,260,014 (334,623)
----------- -----------
PRINCIPAL TRANSACTIONS:
Contract purchase payments........................................ 17,545,361 39,189,991
Payments to contract owners:
Terminations and withdrawals................................... (1,704,272) (86,876)
----------- -----------
Increase in net assets resulting from principal transactions... 15,841,089 39,103,115
----------- -----------
TOTAL INCREASE IN NET ASSETS...................................... 18,101,103 38,768,492

NET ASSETS:
Beginning of period............................................... 38,768,492 0
----------- -----------
End of period..................................................... $56,869,595 $38,768,492
=========== ===========
</TABLE>

SEE ACCOMPANYING NOTES.

D-3
<PAGE>

NOTES TO FINANCIAL STATEMENTS
SELECT RESERVE DIVISIONS
SEPARATE ACCOUNT D

NOTE A - ORGANIZATION

Separate Account D (the "Separate Account") was established by resolution of
the Board of Directors of American General Life Insurance Company (the
"Company") on November 19, 1973. The Select Reserve Divisions (the "Divisions")
received their first deposits in May 1998.

The Separate Account is registered under the Investment Company Act of 1940 as
a unit investment trust and consisted of sixty-nine investment divisions at the
beginning of the period. On November 18, 1999, the Royce Total Return Portfolio
was no longer offered as an investment division. Previously allocated purchase
payments were transferred to other investment divisions, according to contract
owners' instructions, and the Royce Total Return Portfolio was liquidated and
dissolved on December 30, 1999. As of December 31, 1999, therefore, the
Separate account consists of sixty-eight investment divisions.

These Divisions, funded by series of independently managed mutual fund
portfolios ("Funds") which are available to Select Reserve contract owners, are
as follows:

AMERICAN GENERAL SERIES PORTFOLIO OFFIT VARIABLE INSURANCE FUND, INC.:
COMPANY ("AGSPC") (A RELATED PARTY): OFFIT VIF-Emerging Markets Fund
Money Market Fund OFFIT VIF-High Yield Fund
OFFIT VIF-Total Return Fund
HOTCHKIS AND WILEY VARIABLE TRUST OFFIT VIF-U.S. Government
Equity Income VIP Portfolio Securities Fund
Low Duration VIP Portfolio
ROYCE CAPITAL FUND:
LEVCO SERIES TRUST Royce Premier Portfolio
LEVCO Equity Value Fund
WRIGHT MANAGED BLUE CHIP SERIES TRUST:
NAVELLIER VARIABLE INSURANCE SERIES Wright International Blue Chip
FUND, INC.: Portfolio
Navellier Growth Portfolio Wright Selected Blue Chip
Portfolio

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

The accompanying financial statements of the Divisions of the Separate Account
have been prepared on the basis of generally accepted accounting principles
("GAAP"). The accounting principles followed by the Divisions and the methods
of applying those principles are presented below or in the footnotes which
follow.

SECURITY VALUATION - The investments in shares of the Funds listed above, are
valued at the closing net asset value (market) per share as determined by the
Fund on the day of measurement.

SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the date the order to buy or sell is executed (trade date).
Dividend income and distributions of capital gains are recorded on the ex-
dividend date and reinvested upon receipt. Realized gains and losses from
security transactions are determined on the basis of identified cost.

ADMINISTRATIVE EXPENSES AND MORTALITY AND EXPENSE RISK CHARGES - Deductions
for administrative expenses and mortality and expense risks assumed by the
Company are calculated daily, at an annual rate, on the daily net asset value of
the Divisions and are paid to the Company. The annual rate for the
administrative expense charge is 0.04% and the annual rate for the mortality and
expense risk charge is 0.36%.

The Funds pay their respective investment advisers a monthly fee based on each
fund's average net asset value.

D-4
<PAGE>

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION -
CONTINUED

ANNUITY RESERVES - Annuity reserves are computed for currently payable
contracts according to the 1983a Individual Annuity Mortality Table projected
under Scale G factors. The assumed interest rate is 3.5%. Charges to annuity
reserves for mortality and expense risk experience are reimbursed to the Company
if the reserves required are less than originally estimated. If additional
reserves are required, the Company reimburses the Separate Account.

NOTE C - FEDERAL INCOME TAXES

The Company is taxed as a life insurance company under the Internal Revenue
Code and includes the operations of the Separate Account in determining its
federal income tax liability. Under existing federal income tax law, the
investment income and capital gains from sales of investments realized by the
Separate Account are not taxable. Therefore, no federal income tax provision
has been made.

NOTE D - INVESTMENTS

Fund shares are purchased at net asset value with net contract payments
(contract purchase payments less terminations, withdrawals and amounts payable
to the Company) and reinvestment of distributions made by the Funds. The
following is a summary of Fund shares owned as of December 31, 1999.

<TABLE>
<CAPTION>
Net Value of Unrealized
Asset Shares at Cost of Appreciation/
Fund Shares Value Market Shares Held (Depreciation)
<S> <C> <C> <C> <C> <C>

American General Series Portfolio Company:
Money Market Fund............................... 693,058.960 $ 1.00 $ 693,059 $ 693,059 $ 0

Hotchkis and Wiley Variable Trust:
Equity Income VIP Portfolio..................... 6,630.298 8.83 58,546 65,551 (7,005)
Low Duration VIP Portfolio...................... 56,488.787 9.71 548,506 564,236 (15,730)
----------- ----------- -----------
607,052 629,787 (22,735)
LEVCO Series Trust:
LEVCO Equity Value Fund......................... 17,461.213 11.65 203,423 205,369 (1,946)

Navellier Variable Insurance Series Fund, Inc.:
Navellier Growth Portfolio...................... 120,344.152 21.48 2,584,992 1,830,763 754,229

OFFIT Variable Insurance Fund, Inc.:
OFFIT VIF-Emerging Markets Fund................. 775,370.536 8.46 6,559,635 5,978,512 581,123
OFFIT VIF-High Yield Fund....................... 3,381,903.571 9.50 32,128,084 35,015,734 (2,887,650)
OFFIT VIF-Total Return Fund..................... 0.000 9.58 0 0 0
OFFIT VIF-U.S. Gov't. Sec. Fund................. 1,088,507.233 9.94 10,819,762 10,876,959 (57,197)
----------- ----------- -----------
49,507,481 51,871,205 (2,363,724)
Royce Capital Fund:
Royce Premier Portfolio......................... 14,942.927 5.23 78,151 78,286 (135)

Wright Managed Blue Chip Series Trust :
Wright International Blue Chip Portfolio........ 66,471.870 13.82 918,641 782,346 136,295
Wright Selected Blue Chip Portfolio............. 155,776.102 14.61 2,275,889 2,267,446 8,443
----------- ----------- -----------
3,194,530 3,049,792 144,738
----------- ----------- -----------
Total $56,868,688 $58,358,261 $(1,489,573)
=========== =========== ===========
</TABLE>

The aggregate cost of purchases and proceeds from sales of investments for
the year ended December 31, 1999 were $24,590,052 and $5,035,425, respectively.
The cost of total investments owned at December 31, 1999 was the same for both
financial reporting and federal income tax purposes. Gross unrealized
appreciation and gross unrealized depreciation as of December 31, 1999 were
$1,480,090 and $2,969,663, respectively.

D-5
<PAGE>

SEPARATE ACCOUNT D - SELECT RESERVE DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE E - SUMMARY OF CHANGES IN UNITS

SUMMARY OF CHANGES IN UNITS FOR THE YEAR ENDED DECEMBER 31, 1999

CONTRACTS IN ACCUMULATION PERIOD:

<TABLE>
<CAPTION>
AGSPC Hotchkis and Wiley Hotchkis and Wiley LEVCO Navellier
Money Equity Income Low Duration Equity Value Growth
Market Fund VIP Portfolio VIP Portfolio Fund Portfolio
<S> <C> <C> <C> <C> <C>
Outstanding at beginning of period... 10,286.729 10,458.649 134,280.851 12,926.642 17,224.179
Purchase payments.................... 0.000 0.000 6,930.285 0.000 216,019.474
Terminations and withdrawals......... (10,695.518) (8,503.462) (15,709.237) (42,842.172) (2,591.733)
Transfers to annuity................. 0.000 0.000 0.000 0.000 0.000
Transfers between funds.............. 131,139.895 10,973.356 (20,803.745) 64,368.338 20,834.135
------------- ------------- ------------ ------------- -----------
Outstanding at end of period......... 130,731.106 12,928.543 104,698.154 34,452.808 251,486.055
============= ============= ============ ============= ===========

OFFIT VIF- OFFIT VIF- OFFIT VIF- OFFIT VIF- Royce
Emerging High Yield Total Return U.S. Government Premier
Markets Fund Fund Fund Securities Fund Portfolio

Outstanding at beginning of period... 862,692.096 5,255,659.406 197,419.407 0.000 10,977.370
Purchase payments.................... 205,426.976 870,921.012 7,653.760 1,956,088.551 0.000
Terminations and withdrawals......... (2,756.189) (2,569.360) (48,108.924) (4,220.904) (3,728.388)
Transfers to annuity................. 0.000 0.000 0.000 0.000 0.000
Transfers between funds.............. 1,912.291 .002 (156,964.243) 183,801.310 7,861.989
------------- ------------- ------------ ------------- -----------
Outstanding at end of period......... 1,067,275.174 6,124,011.060 0.000 2,135,668.957 15,110.971
============= ============= ============ ============= ===========

Royce Wright Wright
Total Return International Blue Selected Blue
Portfolio/(1)/ Chip Portfolio Chip Portfolio

Outstanding at beginning of period... 2,000.000 259,926.894 744,426.830
Purchase payments.................... 0.000 7,621.347 22,199.258
Terminations and withdrawals......... (20,273.488) (42,078.525) (132,198.670)
Transfers to annuity................. 0.000 0.000 0.000
Transfers between funds.............. 18,273.488 (83,206.119) (205,628.627)
------------- ------------- ------------
Outstanding at end of period......... 0.000 142,263.597 428,798.791
============= ============= ============
</TABLE>

/(1)/ The Royce Total Return Portfolio was liquidated during 1999.

D-6
<PAGE>

NOTE E - SUMMARY OF CHANGES IN UNITS - CONTINUED

SUMMARY OF CHANGES IN UNITS FOR THE PERIOD ENDED DECEMBER 31, 1998

CONTRACTS IN ACCUMULATION PERIOD:

Outstanding at beginning of period... 0.000 0.000 0.000 0.000 0.000
Purchase payments.................... 32,710.853 2,000.000 121,892.056 2,000.000 14,632.446
Terminations and withdrawals......... 0.000 0.000 (2,777.066) 0.000 0.000
Transfers to annuity................. 0.000 0.000 0.000 0.000 0.000
Transfers between funds.............. (22,424.124) 8,458.649 15,165.861 10,926.642 2,591.733
----------- ------------- ----------- ---------- ----------
Outstanding at end of period......... 10,286.729 10,458.649 134,280.851 12,926.642 17,224.179
=========== ============= =========== ========== ==========

OFFIT VIF- OFFIT VIF- OFFIT VIF- OFFIT VIF- Royce
Emerging High Yield Total Return U.S. Government Premier
Markets Fund Fund Fund Securities Fund Portfolio

Outstanding at beginning of period... 0.000 0.000 0.000 0.000 0.000
Purchase payments.................... 859,935.907 5,253,122.923 175,590.912 0.000 7,248.982
Terminations and withdrawals......... 0.000 (2,360.358) (478.934) 0.000 0.000
Transfers to annuity................. 0.000 0.000 0.000 0.000 0.000
Transfers between funds.............. 2,756.189 4,896.841 22,307.429 0.000 3,728.388
----------- ------------- ----------- ---------- ----------
Outstanding at end of period......... 862,692.096 5,255,659.406 197,419.407 0.000 10,977.370
=========== ============= =========== ========== ==========

Royce Wright Wright
Total Return International Blue Selected Blue
Portfolio/(1)/ Chip Portfolio Chip Portfolio

Outstanding at beginning of period... 0.000 0.000 0.000
Purchase payments.................... 2,000.000 320,524.332 749,535.212
Terminations and withdrawals......... 0.000 (3,463.953) (9,078.524)
Transfers to annuity................. 0.000 0.000 0.000
Transfers between funds.............. 0.000 (57,133.485) 3,970.142
----------- ------------- -----------
Outstanding at end of period......... 2,000.000 259,926.894 744,426.830
=========== ============= ===========
</TABLE>

/(1)/ The Royce Total Return Portfolio was liquidated during 1999.

D-7
<PAGE>

SEPARATE ACCOUNT D - SELECT RESERVE DIVISIONS
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE F - NET ASSETS REPRESENTED BY:

<TABLE>
<CAPTION>
December 31, 1999
<S> <C> <C> <C>

CONTRACTS IN ACCUMULATION PERIOD: Units Unit Value Amount

American General Series Portfolio Company:
Money Market Fund............................... 130,731.106 $ 5.301406 $ 693,059

Hotchkis and Wiley Variable Trust:
Equity Income VIP Portfolio..................... 12,928.543 4.528395 58,546
Low Duration VIP Portfolio...................... 104,698.154 5.238929 548,506
-----------
607,052
LEVCO Series Trust:
LEVCO Equity Value Fund......................... 34,452.808 5.904397 203,423

Navellier Variable Insurance Series Fund, Inc.:
Navellier Growth Portfolio...................... 251,486.055 10.278854 2,584,988

OFFIT Variable Insurance Fund, Inc.:
OFFIT VIF-Emerging Markets Fund................. 1,067,275.174 6.146015 6,559,489
OFFIT VIF-High Yield Fund....................... 6,124,011.060 5.246421 32,129,140
OFFIT VIF-Total Return Fund..................... 0.000 4.933614 0
OFFIT VIF-U.S. Government Securities Fund....... 2,135,668.957 5.066217 10,819,762
-----------
49,508,391
Royce Capital Fund:
Royce Premier Portfolio......................... 15,110.971 5.171841 78,152

Wright Managed Blue Chip Series Trust:
Wright International Blue Chip Portfolio........ 142,263.597 6.457317 918,641
Wright Selected Blue Chip Portfolio............. 428,798.791 5.307591 2,275,889
-----------
3,194,530
-----------
TOTAL CONTRACT OWNER RESERVES $56,869,595
===========
</TABLE>

D-8
<PAGE>

NOTE F - NET ASSETS REPRESENTED BY: - CONTINUED

<TABLE>
<CAPTION>
December 31, 1998
<S> <C> <C> <C>

CONTRACTS IN ACCUMULATION PERIOD: Units Unit Value Amount

American General Series Portfolio Company:
Money Market Fund............................... 10,286.729 $5.081157 $ 52,268

Hotchkis and Wiley Variable Trust:
Equity Income VIP Portfolio..................... 10,458.649 4.673982 48,884
Low Duration VIP Portfolio...................... 134,280.851 5.121855 687,767
-----------
736,651
LEVCO Series Trust:
LEVCO Equity Value Fund......................... 12,926.642 5.122522 66,217

Navellier Variable Insurance Series Fund, Inc.:
Navellier Growth Portfolio...................... 17,224.179 5.356685 92,265

OFFIT Variable Insurance Fund, Inc.:
OFFIT VIF-Emerging Markets Fund................. 862,692.096 4.910106 4,235,910
OFFIT VIF-High Yield Fund....................... 5,255,659.406 5.282978 27,765,533
OFFIT VIF-Total Return Fund..................... 197,419.407 5.068333 1,000,587
OFFIT VIF-U.S. Government Securities Fund....... 0.000 5.112243 0
-----------
33,002,030
Royce Capital Fund:
Royce Premier Portfolio......................... 10,977.370 4.798086 52,670
Royce Total Return Portfolio/(1)/............... 2,000.000 5.100029 10,200
-----------
62,870
Wright Managed Blue Chip Series Trust:
Wright International Blue Chip Portfolio........ 259,926.894 4.906973 1,275,454
Wright Selected Blue Chip Portfolio............. 744,426.830 4.675727 3,480,737
-----------
4,756,191
-----------
TOTAL CONTRACT OWNER RESERVES $38,768,492
===========
</TABLE>
/(1)/ The Royce Total Return Portfolio was liquidated during 1999.

D-9
<PAGE>

SEPARATE ACCOUNT D - Select Reserve Divisions
NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE G - YEAR 2000 CONTINGENCY (UNAUDITED)

Internal Systems. The Company's ultimate parent, American General Corporation
("AGC"), has numerous technology and non-technology systems that are managed on
a decentralized basis. AGC's Year 2000 readiness efforts have been performed by
its key business units with centralized oversight. Each business unit,
including the Company, executed a plan to minimize the risk of a significant
negative impact on its operations.

While the specifics of the plans varied, the plans included the following
activities: (1) perform an inventory of the Company's information technology and
non-information technology systems; (2) assess which items in the inventory may
expose the Company to business interruptions due to Year 2000 issues; (3)
reprogram or replace systems that are not Year 2000 ready; (4) test systems to
prove that they will function into the next century; and (5) return the systems
to operations. As of December 31, 1999, these activities have been completed,
making the Company's critical systems Year 2000 ready.

The Company continued to test its systems throughout 1999 to maintain Year
2000 readiness. In addition, the Company implemented plans for the century
transition. These plans included a freeze on system modifications from November
1999 through January 2000, the creation of rapid response teams to address
problems and limiting vacations for certain business and technical personnel and
establishing Y2K Command Centers. In addition, AGC established Y2K Command
Centers in Houston and each of its locations across the country. Each Command
Center monitored all major business processing activities during the century
transition and reported progress to the Houston Command Center which coordinated
the company's nationwide Year 2000 effort. The Command Centers continued to
operate 24 hours a day until January 7, 2000.

On January 1, 2000, AGC announced that its Y2K Command Centers reported that
all major technology systems, programs, and applications were operating smoothly
following the transition into the 21st century. As of February 7, 2000, the
Company has experienced no interruptions to normal business operations,
including the processing of customer account data and transactions. The
Company will continue to monitor our technology systems and maintain quality
customer service throughout the transition period.

Third Party Relationships. The Company has relationships with various third
parties who must also be Year 2000 ready. These third parties provide (or
receive) resources and services to (or from) the Company and include
organizations with which the Company exchanges information. Third parties
include vendors of hardware, software, and information services; providers of
infrastructure services such as voice and data communications and utilities for
office facilities; investors; customers; distribution channels; and joint
venture partners. Third parties differ from internal systems in that the
Company exercises less, or no, control over such parties' Year 2000 readiness.

The Company developed plans to assess and mitigate the risks associated with
the potential failure of third parties to achieve Year 2000 readiness. These
plans included the following activities: (1) identify and classify third party
dependencies; (2) research, analyze, and document Year 2000 readiness for
critical third parties; and (3) test critical hardware and software products and
electronic interfaces, and, where feasible, the Company has taken reasonable
precautions to protect against the receipt of non-Year 2000 ready data. Where
necessary, critical third party dependencies have been included in The Company's
contingency plans.

Contingency Plans. The Company's contingency planning process was designed to
reduce the risk of Year 2000-related business failures related to both internal
systems and third party relationships. The contingency plans included the
following activities: (1) evaluate the consequences of failure of critical
business processes with significant exposure to Year 2000 risk; (2) determine
the probability of a Year 2000-related failure for those critical processes that
have a high consequence of failure; (3) develop an action plan to complete
contingency plans for critical processes that rank high in consequence and
probability of failure; and (4) complete the applicable contingency plans. The
contingency plans were tested and updated throughout 1999.

D-10
<PAGE>

NOTE G - YEAR 2000 CONTINGENCY (UNAUDITED) - CONTINUED

Risks and Uncertainties. Based on the Year 2000 readiness of internal
systems, century transition plans, plans to deal with third party relationships,
contingency plans and the reports from the AGC Y2K Command Centers described
above, the Company believes that it will experience at most isolated and minor
disruptions of business processes due to the Year 2000 transition. Such
disruptions are not expected to have a material effect on our future results of
operations, liquidity, or financial condition. However, due to the magnitude
and complexity of this project, risks and uncertainties exist and the Company is
not able to predict a most reasonably likely worst case scenario. If Year 2000
readiness is not achieved due to the Company's failure to maintain critical
systems as Year 2000 ready, failure of critical third parties to achieve Year
2000 readiness on a timely basis, failure of contingency plans to reduce Year
2000-related business failures, or other unforeseen circumstances in completing
its plans, the Year 2000 issues could have a material adverse impact on the
Company's operations following the turn of the century.

Costs. Through December 31, 1999, the Company has incurred, and anticipates
that the Company will continue to incur, costs relative to achieving and
maintaining Year 2000 readiness. The cost of activities related to Year 2000
readiness has not had a material adverse effect on the Company's results of
operations or financial condition. In addition, the Company has elected to
accelerate the planned replacement of certain systems as part of the Year 2000
plans. Costs of the replacement systems are being capitalized and amortized
over their useful lives, in accordance with the Company's normal accounting
policies. None of the costs associated with Year 2000 readiness are passed to
divisions of the Separate Account.

D-11

<PAGE>

[LETTERHEAD OF ERNST & YOUNG]

Report of Independent Auditors

Board of Directors and Stockholder
American General Life Insurance Company

We have audited the accompanying consolidated balance sheets of American General
Life Insurance Company (an indirectly wholly-owned subsidiary of American
General Corporation) and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income, comprehensive income, shareholder's
equity, and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American General
Life Insurance Company and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP

March 1,2000

F-1
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheets

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

ASSETS
Investments:
Fixed maturity securities, at fair value
(amortized cost - $27,725,167 in 1999 and $27,029,409 $28,906,261
$27,425,605 in 1998)

Equity securities, at fair value (cost -
$198,640 in 1999 and $193,368 in 1998) 237,065 211,684

Mortgage loans on real estate 1,918,956 1,557,268
Policy loans 1,234,729 1,170,686
Investment real estate 125,563 119,520
Other long-term investments 129,155 86,194
Short-term investments 123,779 222,949
----------------------------
Total investments 30,798,656 32,274,562

Cash 45,983 117,675
Investment in Parent Company (cost - $8,597 in
1999 and 1998) 53,083 54,570

Indebtedness from affiliates 75,195 161,096
Accrued investment income 482,652 459,961
Accounts receivable 186,592 196,596
Deferred policy acquisition costs 1,956,653 1,087,718
Property and equipment 78,908 66,197
Other assets 250,299 206,318
Assets held in separate accounts 23,232,419 15,616,020
----------------------------
Total assets $57,160,440 $50,240,713
============================

See accompanying notes.

F-2
<PAGE>

American General Life Insurance Company

Consolidated Balance Sheets

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Future policy benefits $29,901,842 $29,353,022
Other policy claims and benefits payable 53,326 54,278
Other policyholders' funds 371,632 398,587
Federal income taxes 375,332 677,315
Indebtedness to affiliates 7,086 18,173
Other liabilities 372,416 554,783
Liabilities related to separate accounts 23,232,419 15,616,020
----------------------------
Total liabilities 54,314,053 46,672,178

Shareholder's equity:
Common stock, $10 par value, 600,000 shares
authorized, issued, and outstanding 6,000 6,000

Preferred stock, $100 par value, 8,500 shares
authorized, issued, and outstanding 850 850
Additional paid-in capital 1,371,687 1,368,089
Accumulated other comprehensive (loss) income (356,865) 679,107
Retained earnings 1,824,715 1,514,489
----------------------------
Total shareholder's equity 2,846,387 3,568,535

----------------------------
Total liabilities and shareholder's equity $57,160,440 $50,240,713
============================

See accompanying notes.

F-3
<PAGE>

American General Life Insurance Company

Consolidated Statements of Income

YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------
(In Thousands)

Revenues:
Premiums and other considerations $ 540,029 $ 470,238 $ 428,721
Net investment income 2,348,196 2,316,933 2,198,623
Net realized investment gains 5,351 (33,785) 29,865
(losses)
Other 82,581 69,602 53,370
-----------------------------------------
Total revenues 2,976,157 2,822,988 2,710,579

Benefits and expenses:
Benefits 1,719,375 1,788,417 1,757,504
Operating costs and expenses 495,606 467,067 379,012
Interest expense 74 15 782
Litigation settlement - 97,096 -
-----------------------------------------
Total benefits and expenses 2,215,055 2,352,595 2,137,298
-----------------------------------------
Income before income tax expense 761,102 470,393 573,281

Income tax expense 263,196 153,719 198,724
------------------------------------------
Net income $ 497,906 $ 316,674 $ 374,557
==========================================

See accompanying notes.

F-4
<PAGE>

American General Life Insurance Company

Consolidated Statements of Comprehensive Income

YEAR ENDED DECEMBER 31
1999 1998 1997
----------------------------------------
(In Thousands)

Net income $ 497,906 $ 316,674 $ 374,557
Other comprehensive income:
Gross change in unrealized gains
(losses) on securities (pretax:
($1,581,500) $341,000; $318,700) (1,027,977) 222,245 207,124
Less: gains (losses) realized in 7,995 (29,336) (1,251)
net income
----------------------------------------
Change in net unrealized gains
(losses) on securities (pretax:
($1,593,800) $387,000; $320,600) (1,035,972) 251,581 208,375
----------------------------------------
Comprehensive (loss) income $ (538,066) $ 568,255 $ 582,932
========================================

See accompanying notes.

F-5
<PAGE>

American General Life Insurance Company

Consolidated Statements of Shareholder's Equity

YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------
(In Thousands)

Common stock:
Balance at beginning of year $ 6,000 $ 6,000 $ 6,000
Change during year - - -
-------------------------------------------
Balance at end of year 6,000 6,000 6,000

Preferred stock:
Balance at beginning of year 850 850 850
Change during year - - -
-------------------------------------------
Balance at end of year 850 850 850

Additional paid-in capital:
Balance at beginning of year 1,368,089 1,184,743 933,342
Capital contribution from Parent
Company - 182,284 250,000
Other changes during year 3,598 1,062 1,401
-------------------------------------------
Balance at end of year 1,371,687 1,368,089 1,184,743

Accumulated other comprehensive
(loss) income:
Balance at beginning of year 679,107 427,526 219,151
Change in unrealized gains
(losses) on securities (1,035,972) 251,581 208,375
------------------------------------------
Balance at end of year (356,865) 679,107 427,526

Retained earnings:
Balance at beginning of year 1,514,489 1,442,495 1,469,618
Net income 497,906 316,674 374,557
Dividends paid (187,680) (244,680) (401,680)
------------------------------------------
Balance at end of year 1,824,715 1,514,489 1,442,495
-------------------------------------------
Total shareholder's equity $2,846,387 $3,568,535 $3,061,614
===========================================

See accompanying notes.

F-6
<PAGE>

American General Life Insurance Company

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
OPERATING ACTIVITIES
Net income $ 497,906 $ 316,674 $ 374,557
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Change in accounts receivable 10,004 11,613 (37,752)
Change in future policy benefits and other
policy claims (2,422,221) (866,428) (1,143,736)

Amortization of policy acquisition costs 101,066 125,062 115,467
Policy acquisition costs deferred (307,854) (244,196) (219,339)
Change in other policyholders' funds (26,955) 273 21,639
Provision for deferred income tax expense 85,257 15,872 13,264
Depreciation 24,066 19,418 16,893
Amortization (30,894) (26,775) (28,276)
Change in indebtedness to/from affiliates 74,814 (51,116) (8,695)
Change in amounts payable to brokers (43,321) (894) 31,769
Net loss (gain) on sale of investments 45,379 37,016 (29,865)
Other, net (170,413) 57,307 30,409
--------------------------------------------------------------------
Net cash used in operating activities (2,163,166) (606,174) (863,665)

INVESTING ACTIVITIES
Purchases of investments and loans made (44,508,908) (28,231,615) (29,638,861)
Sales or maturities of investments and
receipts from repayment of loans 43,879,377 26,656,897 28,300,238

Sales and purchases of property, equipment,
and software, net (87,656) (105,907) (9,230)
--------------------------------------------------------------------
Net cash used in investing activities (717,187) (1,680,625) (1,347,853)

FINANCING ACTIVITIES
Policyholder account deposits 5,747,658 4,688,831 4,187,191
Policyholder account withdrawals (2,754,915) (2,322,307) (1,759,660)
Dividends paid (187,680) (244,680) (401,680)
Capital contribution from Parent - 182,284 250,000
Other 3,598 1,062 1,401
--------------------------------------------------------------------
Net cash provided by financing activities 2,808,661 2,305,190 2,277,252
--------------------------------------------------------------------
(Decrease) increase in cash (71,692) 18,391 65,734
Cash at beginning of year 117,675 99,284 33,550
--------------------------------------------------------------------
Cash at end of year $ 45,983 $ 117,675 $ 99,284
====================================================================
</TABLE>

Interest paid amounted to approximately $2,026,000, $420,000, and $1,004,000, in
1999, 1998, and 1997, respectively.

See accompanying notes.

F-7
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 1999

NATURE OF OPERATIONS

American General Life Insurance Company (the "Company") is a wholly-owned
subsidiary of AGC Life Insurance Company, which is a wholly-owned subsidiary of
American General Corporation (the "Parent Company"). The Company's wholly-owned
life insurance subsidiaries are American General Life Insurance Company of New
York ("AGNY") and The Variable Annuity Life Insurance Company ("VALIC"). During
1998, the Company formed a new wholly-owned subsidiary, American General Life
Companies ("AGLC"), to provide management services to certain life insurance
subsidiaries of the Parent Company.

The Company offers a complete portfolio of the standard forms of universal life,
variable universal life, interest-sensitive whole life, term life, structured
settlements, and fixed and variable annuities throughout the United States. In
addition, a variety of equity products is sold through its wholly-owned
broker/dealer, American General Securities, Inc. The Company serves the estate
planning needs of middle- and upper-income households and the life insurance
needs of small- to medium-sized businesses. AGNY offers a broad array of
traditional and interest-sensitive insurance, in addition to individual annuity
products. VALIC provides tax-deferred retirement annuities and employer-
sponsored retirement plans to employees of health care, educational, public
sector, and other not-for-profit organizations throughout the United States.

1. ACCOUNTING POLICIES

1.1 PREPARATION OF FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") and include the accounts of
the Company and its wholly-owned subsidiaries. Transactions with the Parent
Company and other subsidiaries of the Parent Company are not eliminated from the
financial statements of the Company. All other material intercompany
transactions have been eliminated in consolidation.

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and
disclosures of contingent assets and liabilities. Ultimate results could differ
from those estimates.

F-8
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING

The Company and its wholly-owned life insurance subsidiaries are required to
file financial statements with state regulatory authorities. State insurance
laws and regulations prescribe accounting practices for calculating statutory
net income and equity. In addition, state regulators may permit statutory
accounting practices that differ from prescribed practices. The use of such
permitted practices by the Company and its wholly-owned life insurance
subsidiaries did not have a material effect on statutory equity at December 31,
1999.

Statutory financial statements differ from GAAP. Significant differences were as
follows (in thousands):

<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------
Net income:
<S> <C> <C> <C>
Statutory net income (1999 balance is
unaudited) $ 350,294 $ 259,903 $ 327,813
Deferred policy acquisition costs and cost
of insurance purchased 200,285 116,597 103,872
Deferred income taxes (86,456) (53,358) (13,264)
Adjustments to policy reserves 23,110 52,445 (30,162)
Goodwill amortization (2,437) (2,033) (2,067)
Net realized gain on investments 2,246 41,488 20,139
Litigation settlement - (63,112) -
Other, net 10,864 (35,256) (31,774)
--------------------------------------------------------
GAAP net income $ 497,906 $ 316,674 $ 374,557
========================================================
Shareholders' equity:
Statutory capital and surplus (1999 balance
is unaudited) $1,753,570 $1,670,412 $1,636,327

Deferred policy acquisition costs and cost
of insurance purchased 1,975,667 1,109,831 835,031
Deferred income taxes (350,258) (698,350) (535,703)
Adjustments to policy reserves (202,150) (274,532) (319,680)
Acquisition-related goodwill 52,317 54,754 51,424
Asset valuation reserve ("AVR") 351,904 310,564 255,975
Interest maintenance reserve ("IMR") 53,226 27,323 9,596
Investment valuation differences (683,500) 1,487,658 1,272,339
Surplus from separate accounts (180,362) (174,447) (150,928)
Other, net 75,973 55,322 7,233
--------------------------------------------------------
Total GAAP shareholders' equity $2,846,387 $3,568,535 $3,061,614
========================================================
</TABLE>

F-9
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.2 STATUTORY ACCOUNTING (CONTINUED)

The more significant differences between GAAP and statutory accounting
principles are that under GAAP: (a) acquisition costs related to acquiring new
business are deferred and amortized (generally in proportion to the present
value of expected gross profits from surrender charges and investment,
mortality, and expense margins), rather than being charged to operations as
incurred; (b) future policy benefits are based on estimates of mortality,
interest, and withdrawals generally representing the Company's experience, which
may differ from those based on statutory mortality and interest requirements
without consideration of withdrawals; (c) deferred tax assets and liabilities
are established for temporary differences between the financial reporting basis
and the tax basis of assets and liabilities, at the enacted tax rates expected
to be in effect when the temporary differences reverse; (d) certain assets
(principally furniture and equipment, agents' debit balances, computer software,
and certain other receivables) are reported as assets rather than being charged
to retained earnings; (e) acquisitions are accounted for using the purchase
method of accounting rather than being accounted for as equity investments; and
(f) fixed maturity investments are carried at fair value rather than amortized
cost. In addition, statutory accounting principles require life insurance
companies to establish an AVR and an IMR. The AVR is designed to address the
credit-related risk for bonds, preferred stocks, derivative instruments, and
mortgages and market risk for common stocks, real estate, and other invested
assets. The IMR is composed of investment- and liability-related realized gains
and losses that result from interest rate fluctuations. These realized gains and
losses, net of tax, are amortized into income over the expected remaining life
of the asset sold or the liability released.

1.3 INSURANCE CONTRACTS

The insurance contracts accounted for in these financial statements include
primarily long-duration contracts. Long-duration contracts include traditional
whole life, endowment, guaranteed renewable term life, universal life, limited
payment, and investment contracts. Long-duration contracts generally require the
performance of various functions and services over a period of more than one
year. The contract provisions generally cannot be changed or canceled by the
insurer during the contract period; however, most new contracts written by the
Company allow the insurer to revise certain elements used in determining premium
rates or policy benefits, subject to guarantees stated in the contracts. At
December 31, 1999 and 1998, insurance investment contracts of $25.9 million and
$24.1 million, respectively, were included in the Company's liabilities.

F-10
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS

FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities were classified as available-for-sale
and recorded at fair value at December 31, 1999 and 1998. After adjusting
related balance sheet accounts as if the unrealized gains (losses) had been
realized, the net adjustment is recorded in accumulated other comprehensive
income within shareholders' equity. If the fair value of a security classified
as available-for-sale declines below its cost and this decline is considered to
be other than temporary, the security is reduced to its fair value, and the
reduction is recorded as a realized loss.

During 1999, the Company maintained a trading portfolio of certain fixed
maturity securities. Trading securities are recorded at fair value. Unrealized
and realized gains (losses) are included in net investment income. The Company
held no trading securities at December 31, 1999, and trading securities did not
have a material effect on net investment income in 1999.

MORTGAGE LOANS

Mortgage loans are reported at amortized cost, net of an allowance for losses.
The allowance for losses covers all non-performing loans and loans for which
management has a concern based on its assessment of risk factors, such as
potential non-payment or non-monetary default. The allowance is based on a loan-
specific review and a formula that reflects past results and current trends.

Loans for which the Company determines that collection of all amounts due under
the contractual terms is not probable are considered to be impaired. The Company
generally looks to the underlying collateral for repayment of impaired loans.
Therefore, impaired loans are considered to be collateral dependent and are
reported at the lower of amortized cost or fair value of the underlying
collateral, less estimated cost to sell.

POLICY LOANS

Policy loans are reported at unpaid principal balance.

F-11
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.4 INVESTMENTS (CONTINUED)

INVESTMENT REAL ESTATE

Investment real estate is classified as held for investment or available for
sale, based on management's intent. Real estate held for investment is carried
at cost, less accumulated depreciation and impairment write-downs. Real estate
available for sale is carried at the lower of cost (less accumulated
depreciation, if applicable) or fair value less cost to sell.

INVESTMENT INCOME

Interest on fixed maturity securities and performing and restructured mortgage
loans is recorded as income when earned and is adjusted for any amortization of
premium or discount. Interest and any amortization of premium or discount on
delinquent mortgage loans is recorded as income only when actual interest
payments are received. Dividends are recorded as income on ex-dividend dates.

REALIZED INVESTMENT GAINS

Realized investment gains (losses) are recognized using the specific-
identification method.

1.5 SEPARATE ACCOUNTS

Separate Accounts are assets and liabilities associated with certain contracts,
principally annuities; for which the investment risk lies solely with the
contract holder. Therefore, the Company's liability for these accounts equals
the value of the account assets. Investment income, realized investment gains
(losses), and policyholder account deposits and withdrawals related to separate
accounts are excluded from the consolidated statements of income, comprehensive
income, and cash flows. Assets held in Separate Accounts are primarily shares in
mutual funds, which are carried at fair value based on the quoted net asset
value per share.

F-12
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.6 DEFERRED POLICY ACQUISITION COSTS ("DPAC") AND COST OF INSURANCE PURCHASED
("CIP")

Certain costs of writing an insurance policy, including commissions,
underwriting, and marketing expenses, are deferred and reported as DPAC.

CIP represents the cost assigned to insurance contracts in force that are
acquired through the purchase of a block of business. At December 31, 1999, CIP
of $19.0 million was reported within other assets.

DPAC and CIP associated with interest-sensitive life contracts, insurance
investment contracts, and participating life insurance contracts is charged to
expense in relation to the estimated gross profits of those contracts. DPAC and
CIP associated with all other insurance contracts is charged to expense over the
premium-paying period or as the premiums are earned over the life of the
contract.

DPAC and CIP are adjusted for the impact on estimated future gross profits as if
net unrealized gains (losses) on securities had been realized at the balance
sheet date. The impact of this adjustment is included in accumulated other
comprehensive income within shareholder's equity.

The Company reviews the carrying amount of DPAC and CIP on at least an annual
basis. Management considers estimated future gross profits or future premiums,
expected mortality, interest earned and credited rates, persistency, and
expenses in determining whether the carrying amount is recoverable.

1.7 PREMIUM RECOGNITION

Most receipts for annuities and interest-sensitive life insurance policies are
classified as deposits instead of revenue. Revenues for these contracts consist
of mortality, expense, and surrender charges. Policy charges that compensate the
Company for future services are deferred and recognized in income over the
period earned, using the same assumptions used to amortize DPAC (see Note 1.6).

For limited-payment contracts, net premiums are recorded as revenue, and the
difference between the gross premium received and the net premium is deferred
and recognized in a constant relationship to insurance in force. For all other
contracts, premiums are recognized when due.

F-13
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.8 OTHER ASSETS

Acquisition-related goodwill, which is included in other assets, is charged to
expense in equal amounts over 40 years. The carrying value of goodwill is
regularly reviewed by management for indicators of impairment in value. If facts
and circumstances suggest that goodwill is impaired, other than temporarily, the
Company assesses the fair value of the underlying assets and reduces goodwill
accordingly.

1.9 POLICY AND CONTRACT CLAIMS RESERVES

Substantially all of the Company's insurance and annuity liabilities relate to
long duration contracts. The contracts normally cannot be changed or canceled by
the Company during the contract period.

For interest-sensitive life insurance and investment contracts, reserves equal
the sum of the policy account balance and deferred revenue charges. Reserves for
other contracts are based on estimates of the cost of future policy benefits.
Reserves are determined using the net level premium method. Interest assumptions
used to compute reserves ranged from 2.5% to 13.5% at December 31, 1999.

1.10 REINSURANCE

The Company limits its exposure to loss on any single insured to $2.5 million by
ceding additional risks through reinsurance contracts with other insurers. The
Company diversifies its risk of reinsurance loss by using a number of reinsurers
that have strong claims-paying ability ratings. If the reinsurer could not meet
its obligations, the Company would reassume the liability. The likelihood of a
material reinsurance liability being reassumed by the Company is considered to
be remote.

A receivable is recorded for the portion of benefits paid and insurance
liabilities that have been reinsured. Reinsurance recoveries on ceded
reinsurance contracts were $28 million, $63 million, and $25 million, during
1999, 1998, and 1997, respectively. The cost of reinsurance is recognized over
the life of the reinsured policies using assumptions consistent with those used
to account for the underlying policies. Benefits paid and future policy benefits
related to ceded insurance contracts are recorded as reinsurance receivables.

F-14
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.11 PARTICIPATING POLICY CONTRACTS

Participating life insurance accounted for approximately 1% and 2% of life
insurance in force at December 31, 1999 and 1998, respectively.

The portion of earnings allocated to participating policyholders that cannot be
expected to inure to shareholders is excluded from net income and shareholder's
equity. Dividends to be paid on participating life insurance contracts are
determined annually based on estimates of the contracts' earnings. Policyholder
dividends were $4.6 million in 1999.

1.12 INCOME TAXES

The Company and its life insurance subsidiaries, together with certain other
life insurance subsidiaries of the Parent Company, are included in a life/non-
life consolidated tax return with the Parent Company and its noninsurance
subsidiaries. The Company participates in a tax sharing agreement with other
companies included in the consolidated tax return. Under this agreement, tax
payments are made to the Parent Company as if the companies filed separate tax
returns; and companies incurring operating and/or capital losses are reimbursed
for the use of these losses by the consolidated return group.

Deferred tax assets and liabilities are established for temporary differences
between the financial reporting basis and the tax basis of assets and
liabilities, at the enacted tax rates expected to be in effect when the
temporary differences reverse. The effect of a tax rate change is recognized in
income in the period of enactment. State income taxes are included in income tax
expense.

A valuation allowance for deferred tax assets is provided if it is more likely
than not that some portion of the deferred tax asset will not be realized. An
increase or decrease in a valuation allowance that results from a change in
circumstances that causes a change in judgment about the realizability of the
related deferred tax asset is included in income. Changes related to
fluctuations in fair value of available-for-sale securities are included in the
consolidated statements of comprehensive income and accumulated other
comprehensive income in shareholder's equity.

F-15
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

1. ACCOUNTING POLICIES (CONTINUED)

1.13 ACCOUNTING CHANGES

In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") 133, Accounting for Derivative
Instruments and Hedging Activities, which requires all derivative instruments to
be recognized at fair value in the balance sheet. Changes in the fair value of a
derivative instrument will be reported as earnings or other comprehensive
income, depending upon the intended use of the derivative instrument. The
Company will adopt SFAS 133 on January 1, 2001. The Company does not expect
adoption to have a material impact on the Company's results of operations and
financial position.

2. INVESTMENTS

2.1 INVESTMENT INCOME

Investment income by type of investment was as follows:

1999 1998 1997
-------------------------------------------
(In Thousands)

Investment income:
Fixed maturities $2,118,794 $2,101,730 $1,966,528
Equity securities 17,227 1,813 1,067
Mortgage loans on real estate 134,878 148,447 157,035
Investment real estate 20,553 23,139 22,157
Policy loans 69,684 66,573 62,939
Other long-term investments 7,539 3,837 3,135
Short-term investments 24,874 15,492 8,626
Investment income from affiliates 8,695 10,536 11,094
-------------------------------------------

Gross investment income 2,402,244 2,371,567 2,232,581
Investment expenses 54,048 54,634 33,958
-------------------------------------------
Net investment income $2,348,196 $2,316,933 $2,198,623
===========================================

The carrying value of investments that produced no investment income during 1999
was less than 0.2% of total invested assets. The ultimate disposition of these
investments is not expected to have a material effect on the Company's results
of operations and financial position.

F-16
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.2 NET REALIZED INVESTMENT GAINS (LOSSES)

Realized gains (losses) by type of investment were as follows:

1999 1998 1997
-------------------------------------------
(In Thousands)

Fixed maturities:
Gross gains $ 118,427 $ 20,109 $ 42,966
Gross losses (102,299) (62,657) (34,456)
-------------------------------------------
Total fixed maturities 16,128 (42,548) 8,510
Equity securities 793 645 1,971
Other investments (11,570) 8,118 19,384
-------------------------------------------
Net realized investment gains
(losses) 5,351 (33,785) 29,865
before tax
Income tax expense (benefit) 1,874 (11,826) 10,452
Net realized investment gains
(losses) $ 3,477 $(21,959) $ 19,413
after tax
===========================================

F-17
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES

All fixed maturity and equity securities are classified as available-for-sale
and reported at fair value (see Note 1.4). Amortized cost and fair value at
December 31, 1999 and 1998 were as follows:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
--------------------------------------------------
(In Thousands)
DECEMBER 31, 1999
Fixed maturity securities:
Corporate securities:
Investment-grade $19,455,518 $134,003 $(704,194) $18,885,326
Below investment-grade 1,368,494 11,863 (114,260) 1,266,098
Mortgage-backed securities* 6,195,003 45,022 (74,746) 6,165,279
U.S. government obligations 276,621 15,217 (2,376) 289,462
Foreign governments 245,782 5,774 (1,767) 249,789
State and political 154,034 499 (10,836) 143,697
subdivisions
Redeemable preferred stocks 29,715 43 - 29,758
-------------------------------------------------
Total fixed maturity $27,725,167 $212,421 $(908,179) $27,029,409
securities
==================================================
Equity securities $ 198,640 $ 39,381 $ (956) $ 237,065
==================================================
Investment in Parent Company $ 8,597 $ 44,486 $ - $ 53,083
==================================================

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-18
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
-------------------------------------------------
(In Thousands)
DECEMBER 31, 1998
Fixed maturity securities:
Corporate securities:
Investment-grade $18,800,553 $1,129,504 $(26,353) $19,903,703
Below investment-grade 1,409,198 33,910 (45,789) 1,397,320
Mortgage-backed securities* 6,359,242 294,331 (870) 6,652,703
U.S. government obligations 417,822 69,321 (178) 486,965
Foreign governments 331,699 24,625 (2,437) 353,887
State and political 86,778 4,796 (187) 91,387
subdivisions
Redeemable preferred stocks 20,313 - (17) 20,296
-------------------------------------------------
Total fixed maturity $27,425,605 $1,556,487 $(75,831) $28,906,261
securities
=================================================
Equity securities $ 193,368 $ 19,426 $ (1,110) $ 211,684
=================================================
Investment in Parent Company $ 8,597 $ 45,973 $ - $ 54,570
=================================================

* Primarily include pass-through securities guaranteed by and mortgage
obligations ("CMOs") collateralized by the U.S. government and government
agencies.

F-19
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.3 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)

Net unrealized gains (losses) on securities included in accumulated
comprehensive income in shareholders' equity at December 31 were as follows:

1999 1998
-------------------------------
(In Thousands)
Gross unrealized gains $ 296,288 $1,621,883
Gross unrealized losses (909,135) (76,941)
DPAC and other fair value adjustments 200,353 (488,120)
Deferred federal income taxes 55,631 (377,718)
Net unrealized (losses) gains on securities $(356,863) $ 679,104
===============================

The contractual maturities of fixed maturity securities at December 31, 1999
were as follows:
1999 1998
--------------------------------------------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------------------------------------------------------
(In thousands) (In thousands)
Fixed maturity
securities, excluding
mortgage-backed
securities:
Due in one year or $ 810,124 $ 813,683 $ 531,496 $ 536,264
less
Due after one year
through five years 5,380,557 5,394,918 5,550,665 5,812,581

Due after five years
through ten years 8,350,207 8,080,065 9,229,980 9,747,761

Due after ten years 6,988,799 6,575,461 5,754,220 6,156,950
Mortgage-backed 6,195,480 6,165,282 6,359,244 6,652,705
securities
--------------------------------------------------------
Total fixed maturity $27,725,167 $27,029,409 $27,425,605 $28,906,261
securities
========================================================

Actual maturities may differ from contractual maturities, since borrowers may
have the right to call or prepay obligations. In addition, corporate
requirements and investment strategies may result in the sale of investments
before maturity. Proceeds from sales of fixed maturities were $12.3 billion,
$5.4 billion, and $14.8 billion during 1999, 1998, and 1997, respectively.

F-20
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE

Diversification of the geographic location and type of property collateralizing
mortgage loans reduces the concentration of credit risk. For new loans, the
Company requires loan-to-value ratios of 75% or less, based on management's
credit assessment of the borrower. The mortgage loan portfolio was distributed
as follows at December 31, 1999 and 1998:

OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
----------------------------------------------
(In Millions)

DECEMBER 31, 1999
Geographic distribution:
South Atlantic $ 470 24.6% 0.2%
Pacific 363 18.9 7.8
West South Central 185 9.6 0.0
East South Central 144 7.5 0.0
East North Central 256 13.3 0.0
Mid-Atlantic 323 16.8 0.9
Mountain 107 5.6 13.8
West North Central 43 2.2 0.0
New England 44 2.3 0.0
Allowance for losses (16) (0.8) 0.0
-------------------------------
Total $1,919 100.0% 2.4%
===============================

Property type:
Retail $ 628 32.6% 2.5%
Office 746 38.9 4.2
Industrial 302 15.7 0.0
Apartments 189 9.9 0.0
Hotel/motel 46 2.4 0.0
Other 24 1.3 0.2
Allowance for losses (16) (0.8) 0.0
-------------------------------
Total $1,919 100.0% 2.4%
===============================

F-21
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (Continued)

2. INVESTMENTS (CONTINUED)

2.4 MORTGAGE LOANS ON REAL ESTATE (CONTINUED)

OUTSTANDING PERCENT OF PERCENT
AMOUNT TOTAL NONPERFORMING
----------------------------------------------
(In Millions)
DECEMBER 31, 1998
Geographic distribution:
South Atlantic $ 429 27.6% 0.2%
Pacific 320 20.6 10.4
Mid-Atlantic 326 20.9 4.1
East North Central 178 11.4 -
Mountain 95 6.1 -
West South Central 118 7.5 -
East South Central 46 3.0 -
West North Central 33 2.1 -
New England 25 1.6 -
Allowance for losses (13) (0.8) -
-------------------------------
Total $1,557 100.00% 3.1%
===============================

Property type:
Office $ 593 38.1% 7.0%
Retail 423 27.1 0.2
Industrial 292 18.8 -
Apartments 178 11.4 2.9
Hotel/motel 38 2.4 -
Other 46 3.0 -
Allowance for losses (13) (0.8) -
-------------------------------
Total $1,557 100% 3.1%
===============================

Impaired mortgage loans on real estate and related interest income is not
material.

F-22
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

2. INVESTMENTS (CONTINUED)

2.5 INVESTMENT SUMMARY

Investments of the Company were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
-----------------------------------------------------------------------------------------
CARRYING CARRYING
COST FAIR VALUE AMOUNT COST FAIR VALUE AMOUNT
-----------------------------------------------------------------------------------------
(In Thousands) (In Thousands)
Fixed maturities:
Bonds:
<S> <C> <C> <C> <C> <C> <C>
United States
government and
government agencies $ 276,621 $ 289,462 $ 289,462 $ 417,822 $ 486,965 $ 486,965
and authorities
States, municipalities,
and political 154,034 143,697 143,697 86,778 91,387 91,387
subdivisions
Foreign governments 245,782 249,789 249,789 331,699 353,887 353,887
Public utilities 1,468,758 1,465,129 1,465,129 1,777,172 1,895,326 1,895,326
Mortgage-backed 6,195,003 6,165,279 6,165,279 6,359,242 6,652,703 6,652,703
securities
All other corporate 19,355,254 18,686,295 18,686,295 18,432,579 19,405,697 19,405,697
bonds**
Redeemable preferred 29,715 29,758 29,758 20,313 20,296 20,296
stocks
---------------------------------------------------------------------------------------------
Total fixed maturities 27,725,167 27,029,409 27,029,409 27,425,605 28,906,261 28,906,261
Equity securities:
Common stocks:
Banks, trust, and
insurance companies - - - - - -

Industrial,
miscellaneous, and 180,849 219,089 219,089 176,321 211,684 211,684
other

Nonredeemable preferred
stocks 17,791 17,976 17,976 17,047 - -
---------------------------------------------------------------------------------------------

Total equity securities 198,640 237,065 237,065 193,368 211,684 211,684
Mortgage loans on real 1,918,956 1,829,212 1,918,956 1,557,268 1,607,599 1,557,268
estate*
Investment real estate 125,563 XXXXXXX 125,563 119,520 xxxxxxx 119,520
Policy loans 1,234,729 1,205,056 1,234,729 1,170,686 1,252,409 1,170,686
Other long-term investments 129,155 XXXXXXX 129,155 86,194 xxxxxxx 86,194
Short-term investments 123,779 XXXXXXX 123,779 222,949 xxxxxxx 222,949
---------------------------------------------------------------------------------------------
Total investments $31,455,989 $ XXXXXXX $ 30,798,656 $ 30,775,590 $ xxxxxxx $ 32,274,562
============================================================================================
</TABLE>

* Amount is net of allowance for losses of $16 million and $13 million at
December 31, 1999 and 1998, respectively.

** Includes derivative financial instruments with negative fair values of $4.7
million and $1.0 million and positive fair values of $2.3 million and $24.3
million at December 31, 1999 and 1998, respectively.

F-23
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

3. DEFERRED POLICY ACQUISITIONS COSTS

The balance of DPAC at December 31 and the components of the change reported in
operating costs and expenses for the years then ended were as follows:

1999 1998 1997
--------------------------------------
(In Thousands)
Balance at January 1 $1,087,718 $ 835,031 $1,042,783
Capitalization 307,854 244,196 219,339
Amortization (101,066) (125,062) (115,467)
Effect of realized and unrealized
gains (losses) on securities 662,147 133,553 (311,624)
--------------------------------------
Balance at December 31 $1,956,653 $1,087,718 $ 835,031
=======================================

4. OTHER ASSETS

Other assets consisted of the following:

DECEMBER 31
1999 1998
------------------------------
(In Thousands)

Goodwill $ 52,317 $ 54,754
American General Corporation CBO (Collateralized
Bond Obligation) 98-1 Ltd. - 9,740

Cost of insurance purchased ("CIP") 19,014 22,113
Computer software 117,571 78,775
Other 61,397 40,936
------------------------------
Total other assets $250,299 $206,318
==============================

F-24
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

4. OTHER ASSETS (CONTINUED)

A rollforward of CIP for the year ended December 31, 1999, was as follows:

1999
------------

(In
Thousands)

Balance at January 1 $ 22,113
Acquisition of business -
Accretion of interest at 5.02% 926
Amortization (4,025)
---------
Balance at December 31 $ 19,014
=========

5. FEDERAL INCOME TAXES

5.1 TAX LIABILITIES

Income tax liabilities were as follows:

DECEMBER 31
1999 1998
-----------------------------
(In Thousands)

Current tax (receivable) payable $ 25,074 $ (21,035)
Deferred tax liabilities, applicable to:
Net income 405,889 320,632
Net unrealized investment gains (55,631) 377,718
-----------------------------
Total deferred tax liabilities 350,258 698,350
-----------------------------
Total current and deferred tax liabilities $375,332 $677,315
=============================

F-25
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.1 TAX LIABILITIES (CONTINUED)

Components of deferred tax liabilities and assets at December 31 were as
follows:

1999 1998
--------------------------
(In Thousands)

Deferred tax liabilities applicable to:
Deferred policy acquisition costs $ 601,678 $ 307,025
Basis differential of investments - 590,661
Other 171,763 150,189
---------------------------

Total deferred tax liabilities 773,441 1,047,875

Deferred tax assets applicable to:
Policy reserves (215,465) (212,459)
Basis differential of investments (158,421) -
Other (141,236) (137,066)
--------------------------

Total deferred tax assets before valuation
allowance (515,122) (349,525)
Valuation allowance 91,939 -
--------------------------

Total deferred tax assets, net of valuation
allowance (423,183) (349,525)
--------------------------
Net deferred tax liabilities $ 350,258 $ 698,350
==========================

A portion of life insurance income earned prior to 1984 is not taxable unless it
exceeds certain statutory limitations, is distributed as dividends, or unless
the income tax deferred status of such amount is modified by future tax
legislation. Such income, accumulated in policyholders' surplus accounts,
totaled $88.2 million at December 31, 1999. At current corporate rates, the
maximum amount of tax on such income is approximately $30.9 million. Deferred
income taxes on these accumulations are not required because no distributions
are expected.

F-26
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.1 TAX LIABILITIES (CONTINUED)

Components of income tax expense for the years were as follows:

1999 1998 1997
-------------------------------------
(In Thousands)

Current expense $176,725 $134,344 $185,460
Deferred expense (benefit):
Deferred policy acquisition cost 65,377 33,230 27,644
Policy reserves (22,654) 2,189 (27,496)
Basis differential of investments (4,729) 11,969 3,769
Litigation settlement 22,641 (33,983) -
Year 2000 - (9,653) -
Internally developed software 18,654 - -
Other, net 7,182 15,623 9,347
-------------------------------------
Total deferred expense 86,471 19,375 13,264
-------------------------------------
Income tax expense $263,196 $153,719 $198,724
=====================================

5.2 TAX EXPENSE

A reconciliation between the income tax expense computed by applying the federal
income tax rate (35%) to income before taxes and the income tax expense reported
in the financial statement is presented below.

1999 1998 1997
-------------------------------------
(In Thousands)
Income tax at statutory percentage
of GAAP pretax income $266,386 $164,638 $200,649
Tax-exempt investment income (16,423) (11,278) (9,493)
Goodwill 853 712 723
Other 12,380 (353) 6,845
-------------------------------------
Income tax expense $263,196 $153,719 $198,724
=====================================

F-27
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

5. FEDERAL INCOME TAXES (CONTINUED)

5.3 TAXES PAID

Income taxes paid amounted to approximately $126 million, $159 million, and $168
million in 1999, 1998, and 1997, respectively.

5.4 TAX RETURN EXAMINATIONS

The Parent Company and the majority of its subsidiaries file a consolidated
federal income tax return. The Internal Revenue Service ("IRS") has completed
examinations of the Parent Company's tax returns through 1992. The IRS is
currently examining tax returns for 1993 through 1996. In addition, the tax
returns of companies recently acquired are also being examined. Although the
final outcome of any issues raised in examination is uncertain, the Parent
Company believes that the ultimate liability, including interest, will not
materially exceed amounts recorded in the consolidated financial statements.

6. TRANSACTIONS WITH AFFILIATES

Affiliated notes and accounts receivable were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------------------------------------------
PAR VALUE BOOK VALUE PAR VALUE BOOK VALUE
------------------------------------------------------------
<S> <C> <C> <C> <C>

(In Thousands)

American General
Corporation, 9 3/8%, $ 4,725 $ 3,410 $ 4,725 $ 3,345
due 2008
American General
Corporation, Promissory
notes, due 2004 12,232 12,232 14,679 14,679
American General
Corporation, Restricted
Subordinated Note,
13 1/2%, due 2002 27,378 27,378 29,435 29,435
------------------------------------------------------------
Total notes receivable
from affiliates 44,335 43,020 48,839 47,459
Accounts receivable from
affiliates - 32,175 - 113,637
------------------------------------------------------------
Indebtedness from $44,335 $75,195 $48,839 $161,096
affiliates
============================================================
</TABLE>

F-28
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

6. TRANSACTIONS WITH AFFILIATES (CONTINUED)

Various American General companies provide services to the Company, principally
mortgage servicing and investment management services, provided by American
General Investment Management Corporation on a fee basis. The Company paid
approximately $55,318,000, $46,921,000, and $33,916,000 for such services in
1999, 1998, and 1997, respectively. Accounts payable for such services at
December 31, 1999 and 1998 were not material. The Company rents facilities and
provides services on an allocated cost basis to various American General
companies. Beginning in 1998, amounts received by the Company from affiliates
include amounts received by its wholly-owned, non-life insurance subsidiary,
American General Life Companies ("AGLC"). AGLC provides shared services,
including technology, to a number of American General Corporation's life
insurance subsidiaries. The Company received approximately $138,885,000,
$66,550,000, and $6,455,000 for such services and rent in 1999, 1998, and 1997,
respectively. Accounts receivable for rent and services at December 31, 1999 and
1998 were not material.

The Company has 8,500 shares of $100 par value cumulative preferred stock
authorized and outstanding with an $80 dividend rate, redeemable at $1,000 per
share after December 31, 2000. The holder of this stock, The Franklin Life
Insurance Company ("Franklin"), an affiliated company, is entitled to one vote
per share, voting together with the holders of common stock.

7. STOCK-BASED COMPENSATION

Certain officers of the Company participate in American General Corporation's
stock and incentive plans which provide for the award of stock options,
restricted stock awards, performance awards, and incentive awards to key
employees. Stock options constitute the majority of such awards. American
General Corporation follows the intrinsic value method of accounting for stock
options as prescribed by Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. Therefore, the expense related to stock options
is measured as the excess of the market price of the stock at the measurement
date over the exercise price. The measurement date is the first date on which
both the number of shares that the employee is entitled to receive and the
exercise price are known. Under the stock option plans, no expense is
recognized, since the market price equals the exercise price at the measurement
date.

F-29
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

7. STOCK-BASED COMPENSATION (CONTINUED)

Under an alternative accounting method of accounting under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
compensation expense arising from stock options would be measured at the
estimated fair value of the options at the date of grant. Had compensation
expense for the stock options been determined using this method, net income
would have been as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Net income as reported $497,906 $316,674 $374,557
Net income pro forma $495,331 $315,078 $373,328
</TABLE>

The average fair values of the options granted during 1999, 1998, and 1997 were
$17.06, $15.38, and $10.33, respectively. The fair value of each option was
estimated at the date of grant using a Black-Scholes option pricing model. The
weighted average assumptions used to estimate the fair value of the stock
options were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
<S> <C> <C> <C>
Dividend yield 2.5% 2.5% 3.0%
Expected volatility 24.4% 23.0% 22.0%
Risk-free interest rate 4.95% 5.76% 6.4%
Expected life 6 years 6 years 6 years
</TABLE>

8. BENEFIT PLANS

8.1 PENSION PLANS

The Company has non-contributory defined benefit pension plans covering most
employees. Pension benefits are based on the participant's compensation and
length of credited service.

Equity and fixed maturity securities were 71% and 26%, respectively, of the
plans' assets at the plans' most recent balance sheet dates. Additionally, 1% of
plan assets were invested in general investment accounts of the Parent Company's
subsidiaries through deposit administration insurance contracts.

F-30
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The benefit plans have purchased annuity contracts from American General
Corporation's subsidiaries to provide benefits for certain retirees. These
contracts are expected to provide future annual benefits to certain retirees of
American General Corporation and its subsidiaries of approximately $59 million.

The components of pension expense and underlying assumptions were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------
(In Thousands)

<S> <C> <C> <C>
Service cost $ 3,575 $ 3,693 $ 1,891
Interest cost 7,440 6,289 2,929
Expected return on plan assets (12,670) (9,322) (5,469)
Amortization (820) (557) 195
Pension (income) expense $ (2,475) $ 103 $ (454)
===============================================

Discount rate on benefit obligation 7.75% 7.00% 7.25%
Rate of increase in compensation levels 4.25% 4.25% 4.00%
Expected long-term rate of return on
plan assets 10.35% 10.25% 10.00%

</TABLE>

The Company's funding policy is to contribute annually no more than the maximum
deductible for federal income tax purposes. The funded status of the plans and
the prepaid pension expense included in other assets at December 31 were as
follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
Projected benefit obligation (PBO) $100,600 $ 96,554
Plan assets at fair value 145,863 120,898
-------------------------------
Plan assets at fair value in excess of PBO 45,263 24,344
Other unrecognized items, net (26,076) (10,176)
-------------------------------
Prepaid pension expense $ 19,187 $ 14,168
===============================
</TABLE>

F-31
<PAGE>

American General Life Insurance Company

Notes to Consolidated Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.1 PENSION PLANS (CONTINUED)

The change in PBO was as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
PBO at January 1 $ 96,554 $43,393
Service and interest costs 11,015 9,982
Benefits paid (4,919) (1,954)
Actuarial loss (12,036) 17,089
Amendments, transfers, and acquisitions 9,986 28,044
-------------------------------
PBO at December 31 $100,600 $96,554
===============================
</TABLE>

The change in the fair value of plan assets was as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(In Thousands)

<S> <C> <C>
Fair value of plan assets at January 1 $120,898 $ 80,102
Actual return on plan assets 17,934 12,269
Benefits paid (4,919) (1,954)
Acquisitions and other 11,950 30,481
-------------------------------
Fair value of plan assets at December 31 $145,863 $120,898
===============================
</TABLE>

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company has life, medical, supplemental major medical, and dental plans for
certain retired employees and agents. Most plans are contributory, with retiree
contributions adjusted annually to limit employer contributions to predetermined
amounts. The Company has reserved the right to change or eliminate these
benefits at any time.

F-32
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

8. BENEFIT PLANS (CONTINUED)

8.2 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)

The life plans are insured through December 31, 1999. A portion of the retiree
medical and dental plans is funded through a voluntary employees' beneficiary
association ("VEBA"); the remainder is unfunded and self-insured. All of the
retiree medical and dental plans' assets held in the VEBA were invested in
readily marketable securities at its most recent balance sheet date.

Postretirement benefit expense in 1999, 1998, and 1997 was $254,000, $60,000,
and $601,000, respectively. The accrued liability for postretirement benefits
was $18.8 million and $19.2 million at December 31, 1999 and 1998, respectively.
These liabilities were discounted at the same rates used for the pension plans.

9. DERIVATIVE FINANCIAL INSTRUMENTS

9.1 USE OF DERIVATIVE FINANCIAL INSTRUMENTS

The Company's use of derivative financial instruments is generally limited to
reducing its exposure to interest rate and currency exchange risk by utilizing
interest rate and currency swap agreements, and options to enter into interest
rate swap agreements (called swaptions). The Company accounts for these
derivative and financial instruments as hedges. Hedge accounting requires a high
correlation between changes in fair values or cash flows of the derivative
financial instrument and the specific item being hedged, both at inception and
throughout the life of the hedge.

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS

Interest rate swap agreements are used to convert specific investment securities
from a floating to a fixed rate basis, or vice versa, and to hedge against the
risk of declining interest rates on anticipated security purchases. Interest
rate swap agreements are also used to convert a portion of floating -rate
borrowings to a fixed rate and to hedge against the risk of rising interest
rates on anticipated debt issuances.

Currency swap agreements are used to convert cash flows from specific investment
securities denominated in foreign currencies into U.S. dollars at specific
exchange rates and to hedge against currency rate fluctuation on anticipated
security purchases.

F-33
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

The difference between amounts paid and received on swap agreements is recorded
on an accrual basis as an adjustment to net investment income or interest
expense, as appropriate, over the periods covered by the agreements. The related
amount payable to or receivable from counterparties is included in other
liabilities or assets.

The fair values of swap agreements are recognized in the consolidated balance
sheets if the hedge investments are carried at fair value or if they hedge
anticipated purchases of such investments. In this event, changes in the fair
value of a swap agreement are reported in net unrealized gains on securities
included in other accumulated comprehensive income in shareholders' equity,
consistent with the treatment of the related investment security. The fair
values of swap agreements hedging debt are not recognized in the consolidated
balance sheet.

For swap agreements hedging anticipated investment purchases or debt issuances,
the net swap settlement amount or unrealized gain or loss is deferred and
included in the measurement of the anticipated transaction when it occurs.

Swap agreements generally have terms of two to ten years. Any gain or loss from
early termination of a swap agreement is deferred and amortized into income over
the remaining term of the related investment or debt. If the underlying
investment or debt is extinguished or sold, any related gain or loss on swap
agreements is recognized in income.

F-34
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.2 INTEREST RATE AND CURRENCY SWAP AGREEMENTS (CONTINUED)

Interest rate and currency swap agreements related to investment securities at
December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(Dollars in Millions)
<S> <C> <C>
Interest rate swap agreements to receive fixed rate:
Notional amount $ 160 $ 369
Average receive rate 6.73% 6.06%
Average pay rate 6.55% 5.48%
Currency swap agreements (receive U.S.
dollars/pay Canadian dollars):
Notional amount (in U.S. dollars) $ 124 $ 124
Average exchange rate 1.50 1.50
Currency swap agreements (receive U.S. dollars/pay
Australian dollars):
Notional amount (in U.S. dollars) $ 23 $ -
Average exchange rate 0.65 -
</TABLE>

9.3 CALL SWAPTIONS

Options to enter into interest rate swap agreements are used to limit the
Company's exposure to reduced spreads between investment yields and interest
crediting rates should interest rates decline significantly over prolonged
periods. During such periods, the spread between investment yields and interest
crediting rates may be reduced as a result of certain limitations on the
Company's ability to manage interest crediting rates. Call swaptions allow the
Company to enter into interest rate swap agreements to receive fixed rates and
pay lower floating rates, effectively increasing the spread between investment
yields and interest crediting rates.

F-35
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

9. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

9.3 CALL SWAPTIONS (CONTINUED)

Premiums paid to purchase call swaptions are included in investments and are
amortized to net investment income over the exercise period of the swaptions. If
a call swaption is terminated, any gain is deferred and amortized to insurance
and annuity benefits over the expected life of the insurance and annuity
contracts and any unamortized premium is charged to income. If a call swaption
ceases to be an effective hedge, any related gain or loss is recognized in
income.

Swaptions at December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
-------------------------------
(Dollars in Billions)
<S> <C> <C>
Call swaptions:
Notional amount $3.78 $1.76
Average strike rate 4.52% 3.97%

Put swaptions:
Notional amount $2.14 $1.05
Average strike rate 8.60% 8.33%
</TABLE>

9.4 CREDIT AND MARKET RISK

Derivative financial instruments expose the Company to credit risk in the event
of non-performance by counterparties. The Company limits this exposure by
entering into agreements with counterparties having high credit ratings and by
regularly monitoring the ratings. The Company does not expect any counterparty
to fail to meet its obligation; however, non-performance would not have a
material impact on the Company's consolidated results of operations or financial
position.

The Company's exposure to market risk is mitigated by the offsetting effects of
changes in the value of the agreements and the related items being hedged.

F-36
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts and fair values for certain of the Company's financial
instruments at December 31 are presented below. Care should be exercised in
drawing conclusions based on fair value, since (1) the fair values presented do
not include the value associated with all the Company's assets and liabilities,
and (2) the reporting of investments at fair value without a corresponding
evaluation of related policyholders liabilities can be misinterpreted.

The following methods and assumptions were used to estimate the fair value of
financial instruments:

FIXED MATURITY AND EQUITY SECURITIES

Fair values of fixed maturity and equity securities were based on quoted
market prices, where available. For investments not actively traded, fair
values were estimated using values obtained from independent pricing
services or, in the case of some private placements, by discounting
expected future cash flows using a current market rate applicable to yield,
credit quality, and average life of investments.

MORTGAGE LOANS ON REAL ESTATE

Fair value of mortgage loans was estimated primarily using discounted cash
flows, based on contractual maturities and risk-adjusted discount rates.

POLICY LOANS

Fair value of policy loans was estimated using discounted cash flows and
actuarially determined assumptions, incorporating market rates.

INVESTMENT IN PARENT COMPANY

The fair value of the investment in Parent Company is based on quoted
market prices of American General Corporation common stock.

INSURANCE INVESTMENT CONTRACTS

Fair value of insurance investment contracts was estimated using cash flows
discounted at market interest rates.

F-37
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

INDEBTEDNESS FROM AFFILIATES

Indebtedness from affiliates is composed of accounts receivable and notes
receivable from affiliates. Due to the short-term nature of accounts
receivable, fair value is assumed to equal carrying value. Fair value of
notes receivable was estimated using discounted cash flows based on
contractual maturities and discount rates that were based on U.S. Treasury
rates for similar maturity ranges.

11. DIVIDENDS PAID

American General Life Insurance Company paid $187 million, $244 million, and
$401 million, in dividends on common stock to AGC Life Insurance Company in
1999, 1998, and 1997, respectively. The Company also paid $680 thousand per year
in dividends on preferred stock to an affiliate, The Franklin Life Insurance
Company, in 1999, 1998, and 1997.

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES

The Company and its insurance subsidiaries are restricted by state insurance
laws as to the amounts they may pay as dividends without prior approval from
their respective state insurance departments. At December 31, 1999,
approximately $2.6 billion of consolidated shareholder's equity represents net
assets of the Company, which cannot be transferred, in the form of dividends,
loans, or advances to the Parent Company. Approximately $1.9 billion of
consolidated shareholders' equity is similarly restricted as to transfer from
its subsidiaries to the Company.

Generally, the net assets of the Company's subsidiaries available for transfer
to the Parent are limited to the amounts that the subsidiaries' net assets, as
determined in accordance with statutory accounting practices, exceed minimum
statutory capital requirements. However, payments of such amounts as dividends
may be subject to approval by regulatory authorities and are generally limited
to the greater of 10% of policyholders' surplus or the previous year's statutory
net gain from operations.

The Company has various leases, substantially all of which are for office space
and facilities. Rentals under financing leases, contingent rentals, and future
minimum rental commitments and rental expense under operating leases are not
material.

F-38
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

In recent years, various life insurance companies have been named as defendants
in class action lawsuits relating to life insurance pricing and sales practices,
and a number of these lawsuits have resulted in substantial settlements. On
December 16, 1998, American General Corporation announced that certain of its
life insurance subsidiaries had entered into agreements to resolve all pending
market conduct class action lawsuits.

In conjunction with the proposed settlements, the Company recorded a charge of
$97.1 million ($63.1 million after-tax) in the fourth quarter of 1998. The
charge covers the cost of policyholder benefits and other anticipated expenses
resulting from the proposed settlements, as well as other administrative and
legal costs.

On December 31, 1998, the Company entered into an agreement with the Parent
Company whereby the Company assigned, and the Parent Company assumed, $80.1
million of the liabilities of the Company related to the proposed resolution.
The liabilities of American General Life Insurance Company of New York, which
totaled $17.0 million, were not assumed by the Parent Company. As consideration
for the assumption of the liabilities, the Company paid the Parent Company an
amount equal to the liabilities recorded with respect to the proposed resolution
of the litigation. The litigation liabilities were reduced by payments of $2.7
million, and the remaining balance of $94.4 million was included in other
liabilities on the Company's balance sheet at December 31, 1998. All settlements
were finalized in 1999.

The Company is party to various other lawsuits and proceedings arising in the
ordinary course of business. Many of these lawsuits and proceedings, including
those filed by individuals who have excluded themselves from the market conduct
settlement, and lawsuits relating to policies not covered by the market conduct
settlements, arise in jurisdictions, such as Alabama and Mississippi, that
permit damage awards disproportionate to the actual economic damages incurred.
Based upon information presently available, the Company believes that the total
amounts that will ultimately be paid, if any, arising from these lawsuits and
proceedings will not have a material adverse effect on the Company's
consolidated results of operations and financial position. However, it should be
noted that the frequency of large damage awards, including large punitive damage
awards, that bear little or no relation to actual economic damages incurred by
plaintiffs in jurisdictions like Alabama and Mississippi continues to create the
potential for an unpredictable judgment in any given suit.

F-39
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

12. RESTRICTIONS, COMMITMENTS, AND CONTINGENCIES (CONTINUED)

The increase in the number of insurance companies that are under regulatory
supervision has resulted, and is expected to continue to result, in increased
assessments by state guaranty funds to cover losses to policyholders of
insolvent or rehabilitated insurance companies. Those mandatory assessments may
be partially recovered through a reduction in future premium taxes in certain
states. At December 31, 1999 and 1998, the Company has accrued $8.6 million and
$6.0 million, respectively, for guaranty fund assessments, net of $3.4 million
and $3.7 million, respectively, of premium tax deductions. The Company has
recorded receivables of $4.4 million and $6.2 million at December 31, 1999 and
1998, respectively, for expected recoveries against the payment of future
premium taxes. Expenses incurred for guaranty fund assessments were $2.1
million, $3.6 million, and $2.1 million in 1999, 1998, and 1997, respectively.

F-40
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

13. REINSURANCE

Reinsurance transactions for the years ended December 31, 1999, 1998, and 1997
were as follows:

<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
---------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1999
Life insurance in force $50,060,334 $17,056,734 $524,062 $33,527,662 1.56%
==============================================================
Premiums:
Life insurance and annuities $ 101,900 $ 49,530 $ 252 $ 52,622 0.48%
Accident and health insurance 977 84 - 893 0.00%
--------------------------------------------------------------
Total premiums $ 102,877 $ 49,614 $ 252 $ 53,515 0.47%
===============================================================

DECEMBER 31, 1998
Life insurance in force $46,057,031 $13,288,183 $629,791 $33,398,639 1.89%
=============================================================
Premiums:
Life insurance and annuities $ 90,298 $ 42,235 $ 117 $ 48,180 0.24%
Accident and health insurance 1,134 87 - 1,047 0.00%
------------------------------------------------------------
Total premiums $ 91,432 $ 42,322 $ 117 $ 49,227 0.24%
============================================================
DECEMBER 31, 1997
Life insurance in force $45,963,710 $10,926,255 $ 4,997 $35,042,452 0.01%
============================================================
Premiums:
Life insurance and annuities $ 100,357 $ 37,294 $ 75 $ 63,138 0.12%
Accident and health insurance 1,208 172 - 1,036 0.00%
------------------------------------------------------------
Total premiums $ 101,565 $ 37,466 $ 75 $ 64,174 0.12%
============================================================
</TABLE>

Reinsurance recoverable on paid losses was approximately $8.0 million, $7.7
million, and $2.3 million at December 31, 1999, 1998, and 1997, respectively.
Reinsurance recoverable on unpaid losses was approximately $10.5 million, $2.5
million, and $3.2 million at December 31, 1999, 1998, and 1997, respectively.

F-41
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

14. YEAR 2000 CONTINGENCY (UNAUDITED)

Currently, all of our major technology systems, programs, and applications,
including those which rely on third parties, are operating smoothly following
our transition into 2000. We have experienced no interruptions to normal
business operations, including the processing of customer account data and
transactions. We will continue to monitor our technology systems, including
critical third-party dependencies, as necessary to maintain our Year 2000
readiness. We do not expect any future disruptions, if they occur, to have a
material effect on the Company's results of operations, liquidity, or financial
condition.

15. DIVISION OPERATIONS

15.1 NATURE OF OPERATIONS

The Company manages its business operation through two divisions, which are
based on products and services offered.

RETIREMENT SERVICES

The Retirement Services Division provides tax-deferred retirement annuities and
employer-sponsored retirement plans to employees of educational, health care,
public sector, and other not-for-profit organizations marketed nationwide
through exclusive sales representatives.

LIFE INSURANCE

The Life Insurance division provides traditional, interest-sensitive, and
variable life insurance and annuities to a broad spectrum of customers through
multiple distribution channels focused on specific market segments.

F-42
<PAGE>

American General Life Insurance Company

Notes to Consolidate Financial Statements (continued)

15. DIVISION OPERATIONS

15.2 DIVISION RESULTS

Results of each division exclude goodwill amortization, net realized investment
gains, and non-recurring items.

Division earnings information was as follows:

<TABLE>
<CAPTION>
REVENUES INCOME BEFORE TAXES EARNINGS
----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------------------------------------------------------------------------------------

In Millions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retirement Services $2,088 $1,987 $1,859 $ 567 $ 469 $ 398 $ 374 $ 315 $ 261
Life Insurance 883 870 822 191 162 147 123 107 97
---------------------------------------------------------------------------------------
Total divisions 2,971 2,857 2,681 758 631 545 497 422 358
Goodwill
amortization - - - (2) (2) (2) (2) (2) (2)
RG (L) 5 (34) 30 5 (34) 30 3 (22) 19
Nonrecurring items - - - - (125)(a) - - (81)(a) -
----------------------------------------------------------------------------------------
Total consolidated $2,976 $2,823 $2,711 $ 761 $ 470 $ 573 $ 498 $ 317 $ 375
=======================================================================================
</TABLE>

(a) Includes $97 million pretax ($63 million after-tax) in litigation
settlements and $28 million pretax ($18 million after-tax) in Year 2000
costs.

Division balance sheet information was as follows:

<TABLE>
<CAPTION>
ASSETS LIABILITIES
--------------------------------------------------------
December 31
--------------------------------------------------------
In millions 1999 1998 1999 1998
--------------------------------------------------------

<S> <C> <C> <C> <C>
Retirement Services $47,323 $41,347 $45,359 $38,841
Life Insurance 9,837 8,894 8,955 7,831
--------------------------------------------------------
Total consolidated $57,160 $50,241 $54,314 $46,672
========================================================
</TABLE>

F-43

<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

PART A: None

PART B:

(1) Financial Statements of the Select Reserve Divisions of American
General Life Insurance Company Separate Account D:

Report of Ernst & Young LLP, Independent Auditors
Statement of Net Assets as of December 31, 1999
Statement of Operations for the year ended December 31, 1999
Statement of Changes in Net Assets for the year ended December 31, 1999
Notes to Financial Statements

(2) Consolidated Financial Statements of American General Life Insurance
Company:

Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements for the years ended December 31, 1999,
1998 and 1997
Consolidated Statements of Comprehensive Income for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Shareholder's Equity for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements

PART C: None

(b) Exhibits

1 (a) American General Life Insurance Company of Delaware Board of
Directors resolution authorizing the establishment of Separate
Account D./1/

(b) Resolution of the Board of Directors of American General Life
Insurance Company of Delaware authorizing, among other things,
the redomestication of that company in Texas and the renaming
of that company as American General Life Insurance Company./2/

C-1
<PAGE>

(c) Resolution of the Board of Directors of American General Life
Insurance Company of Delaware providing, inter alia, for
Registered Separate Accounts' Standards of Conduct./3/

2 None

3 (a) (i) Distribution Agreement, dated October 3, 1991, between
American General Securities Incorporated and American
General Life Insurance Company./2/

(ii) Amended and Restated Distribution Agreement between
American General Securities Incorporated and American
General Life Insurance Company, effective October 15,
1998/15/

(b) (i)(A) Form of fund Participation Agreement between American
General Life Insurance Company and American General Series
Portfolio Company./13/

(B) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated and American General Series Portfolio
Company./16/

(ii)(A) Form of fund Participation Agreement between American
General Life Insurance Company and Hotchkis and Wiley
Variable Trust./13/

(ii)(B) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated and Hotchkis and Wiley Variable Trust, dated
as of February 26, 1998./18/

(iii)(A) Form of fund Participation Agreement between American
General Life Insurance Company and LEVCO Series Trust./13/

(iii)(B) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated and LEVCO Series Trust, dated as of February
26, 1998./18/

(iv)(A) Form of fund Participation Agreement between American
General Life Insurance Company and Navellier Variable
Insurance Series Fund, Inc./13/

(iv)(B) Participation Agreement by and among American General Life
Insurance Company, American General Securities

C-2
<PAGE>

Incorporated and Navellier Variable Insurance Series Fund,
dated as of January 13, 1998./18/

(v)(A) Form of fund Participation Agreement between American
General Life Insurance Company and OFFITBANK Variable
Insurance Fund, Inc./13/

(v)(B) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated and OFFITBANK Variable Insurance Fund, Inc.,
dated as of February 26, 1998./18/

(vi)(A) Form of fund Participation Agreement between American
General Life Insurance Company and Royce Capital Fund./13/

(vi)(B)(i) Participation Agreement by and among American General Life
Insurance Company, American General Securities
Incorporated and Royce Capital Fund, dated as of August 1,
1998./18/

(ii) First Amendment to Participation Agreement by and among
American General Life Insurance Company, American General
Securities Incorporated and Royce Capital Fund, dated as
of August 1, 1998./18/

(vii)(A) Form of fund Participation Agreement between American
General Life Insurance Company and Wright Managed Blue
Chip Series Trust./13/

(vii)(B) Participation Agreement by and among American General
Life Insurance Company, American General Securities
Incorporated and Wright Managed Blue Chip Series Trust,
dated as of February 26, 1998./18/

(c) Form of Agreement between American General Life Insurance
Company and Dealer regarding exchange and allocation
transaction requests./4/

4 (a) Specimen form of Combination Fixed and Variable Deferred
Annuity Select Reserve/SM/ Contract (Form No. 97505)./11/

(b) Form of Qualified Contract Endorsement./2/

(c) (i) Specimen form of Individual Retirement Annuity Disclosure
Statement and additional specialized forms available under
Contract Form No. 97505./5/

C-3
<PAGE>

(ii) Specimen form of Individual Retirement Annuity
Endorsement./6/

(iii) Specimen form of IRA Instruction Form./4/

5 (a) Specimen form of Application for Contract Form No.
97505./11/

(b) (i) Specimen form of Separate Account D Election of Annuity
Payment Option/Change Form./4/

(ii) Specimen form of Absolute Assignment to Effect Section
1035(a) Exchange and Rollover of a Life Insurance Policy
or Annuity Contract./4/

(iii) Specimen form of Assignment and Transfer Request Form./5/

(ii) Specimen form of Select Reserve/SM/ Service Request,
including telephone transfer authorization./5/

(iii) Specimen form of confirmation of initial purchase payment
under Contract Form No. 97505./13/

(iv) Specimen Change Request Form./5/

(d) Specimen 1035 Exchange Instructions./5/

(e) Specimen Qualified and Non-Qualified Funds Transfer
Instructions./5/

(f) Specimen Change of Beneficiary Form./5/

(g) Specimen Request for Statement of Additional Information
for the Select Reserve Variable Annuity./5/

6 (a) (i) Amended and Restated Articles of Incorporation of American
General Life Insurance Company, effective December 31,
1991./2/

(ii) Amendment to the Amended and Restated Articles of
Incorporation of American General Life Insurance Company,
effective July 13, 1995./17/

(b) Bylaws of American General Life Insurance Company, adopted
January 22, 1992./4/

7 None

C-4
<PAGE>

8 (a) Form of Revenue Sharing Agreement between American
General Series Portfolio Company and American General
Life Insurance Company./12/

(b) Form of Revenue Sharing Agreement between Hotchkis and
Wiley Variable Trust and American General Life Insurance
Company./12/

(d) Form of Revenue Sharing Agreement between Navellier
Variable Insurance Series Fund, Inc. and American General
Life Insurance Company./12/

(e) Form of Revenue Sharing Agreement between OFFITBANK
Variable Insurance Fund, Inc. and American General Life
Insurance Company./12/

(f) Form of Revenue Sharing Agreement between Royce Capital
Fund and American General Life Insurance Company./12/

(g) Form of Revenue Sharing Agreement between Wright Managed
Blue Chip Series Trust and American General Life Insurance
Company./12/

(h) Form of services agreement, dated July 31, 1975, (limited
to introduction and first two recitals, and sections 1-3)
among various affiliates of American General Corporation,
including American General Life Insurance Company and
American General Independent Producer Division. /14/

9 Opinion and consent of Counsel./13/

10 Consent of Independent Auditors. (Filed herewith)

11 None

12 None

13(a) Computations of hypothetical historical average annual
total returns for each Division available under Contract
Form No. 97505 for the one, five and ten year periods
ended December 31, 1996, and since inception./12/

(b) Computations of hypothetical historical cumulative total
returns for each Division available under Contract Form
No.

C-5
<PAGE>

97505 for the one, five and ten year periods ended
December 31, 1996, and since inception./13/

(c) Computations of hypothetical historical seven day yield
and effective yield for the Money Market Division
available under Contract Form No. 97505 for the seven day
period ended December 31, 1996./13/

14 Financial Data Schedule. (See Exhibit 27 below.)

15(a) Power of Attorney with respect to Registration
Statements and Amendments thereto signed by Peter V.
Tuters in his capacity as director and, where applicable,
officer of American General Life Insurance Company./7/

(b) Power of Attorney with respect to Registration Statements
and Amendments thereto signed by Jon Newton in his
capacity as director and, where applicable, officer of
American General Life Insurance Company./8/

(c) Power of Attorney with respect to Registration Statements
and Amendments thereto signed by the following persons in
their capacities as directors and, where applicable,
officers of American General Life Insurance Company:
Messrs. Martin and Herbert./9/

(d) Power of Attorney with respect to Registration Statements
and Amendments thereto signed by the following persons in
their capacities as directors and, where applicable,
officers of American General Life Insurance Company:
Messrs. Fravel and LaGrasse./10/

(e) Power of Attorney with respect to Registration Statements
and Amendments thereto signed by the following persons in
their capacities as directors and, where applicable,
officers of American General Life Insurance Company:
Messrs. D'Agostino, Imhoff and Polkinghorn./13/

27 (Inapplicable, because, notwithstanding Item 24.(b) as
to Exhibits, the Commission staff has advised that no such
Schedule is required.)

- --------------------
/1/ Incorporated herein by reference to the initial filing of Registrant's
Form N-4 Registration Statement (File No. 2-49805) on December 6, 1973.

/2/ Incorporated herein by reference to the initial filing of Registrant's
Form N-4 Registration Statement (File No. 33-43390, filed on October 16,
1991.

/3/ Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement (File No. 33-43390), filed on
December 31, 1991.

C-6
<PAGE>

/4/ Incorporated herein by reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement (File No. 33-43390), filed on April
30, 1992.

/5/ Included in Part A of this Amendment.

/6/ Previously filed in Post-Effective Amendment No. 4 to Registrant's Form
N-4 Registration Statement (File No. 33-43390), filed on April 28, 1995.

/7/ Previously filed in Post-Effective Amendment No. 3 to Registrant's Form
N-4 Registration Statement (File No. 33-43390), filed on March 2, 1994.

/8/ Previously filed in Post-Effective Amendment No. 7 to Registrant's Form
N-4 Registration Statement (File No. 33-43390), filed on April 30, 1996.

/9/ Previously filed in Post-Effective Amendment No. 9 to Registrant's Form
N-4 Registration Statement (File No.33-43390), filed on August 16, 1996.

/10/ Previously filed in Post-Effective Amendment No. 12 to Registrant's Form
N-4 Registration Statement (File No. 33-43390), filed on April 30, 1997.

/11/ Previously filed in the initial filing of Registrant's Form N-4
Registration Statement (File No.333-40637), filed on November 20, 1997.

/12/ Previously filed in Pre-Effective Amendment No. 1 to Registrant's Form
N-4 Registration Statement (File No. 333-40637), filed on February 12,
1998. These exhibits have not been filed in definitive form in reliance
on Rule 483(d)(3) under the Securities Act of 1933.

/13/ Previously filed in Pre-Effective Amendment No. 1 to Registrant's Form
N-4 Registration Statement (File No. 333-40637), filed on February 12,
1998.

/14/ Incorporated herein by reference to Post-Effective Amendment No. 23 to
the Form N-4 Registration Statement of AGL's Separate Account A (File No.
33-44745), filed on April 24, 1998.

/15/ Incorporated herein by reference to the initial filing of Registrant's
Form N-4 Registration Statement (File No. 333-70667) filed on January 15,
1999.

/16/ Incorporated herein by reference to Pre-Effective Amendment No. 1 of the
Form S-6 Registration Statement of American General Life Insurance
Company Separate Account VL-R (File No. 333-42567), filed on March 23,
1998.

/17/ Incorporated herein by reference to Pre-Effective Amendment No. 3 of the
Form S-6 Registration Statement (File No. 333-53909) of American General
Life Insurance Company Separate Account VL-R, filed on August 19, 1998.

/18/ Previously filed in Post-Effective Amendment No. 4 to Registrant's Form
N-4 Registration Statement (File No. 333-40637), filed on March 30, 1999.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The directors, executive officers, and, to the extent responsible for variable
annuity operations, other officers of the depositor are listed below.

C-7
<PAGE>

Positions and Offices
Name and Principal with the
Business Address Depositor
------------------ ----------

Donald W. Britton Director and
2929 Allen Parkway Vice Chairman
Houston, Texas 77019

David A. Fravel Director and
2929 Allen Parkway Executive Vice President
Houston, Texas 77019

Robert F. Herbert, Jr. Director,
2727-A Allen Parkway Senior Vice President,
Houston, TX 77019 Treasurer and Controller

Royce G. Imhoff, II Director, Senior
2727-A Allen Parkway Vice President and
Houston, TX 77019 Chief Marketing Officer

John V. LaGrasse Director and
2929 Allen Parkway Executive Vice President-
Houston, TX 77019 Chief Systems Officer

Rodney O. Martin, Jr. Director and Senior
2929 Allen Parkway Chairman
Houston, TX 77019

Gary D. Reddick Director and
2929 Allen Parkway Executive Vice President
Houston, TX 77019

Ronald H. Ridlehuber Director, President and
2727-A Allen Parkway Chief Executive Officer
Houston, TX 77019

Thomas M. Zurek Director,
2929 Allen Parkway Executive Vice President,
Houston, Texas 77019 General Counsel and Secretary

Robert M. Beuerlein Senior Vice President
2727-A Allen Parkway and Chief Actuary
Houston, TX 77019

F. Paul Kovach, Jr. Senior Vice President-
2727 Allen Parkway Broker Dealers
Houston, TX 77019

C-8
<PAGE>

Simon J. Leech Senior Vice President-
2727-A Allen Parkway Houston Service Center
Houston, TX 77019

Don M. Ward Senior Vice President-
2727 Allen Parkway Variable Products-Marketing
Houston, TX 77019

Farideh Farrokhi Vice President -
2727-A Allen Parkway Variable Products Accounting
Houston, TX 77019

Rosalia S. Nolan Vice President-
2727-A Allen Parkway Policy Administration
Houston, TX 77019

Larry M. Robinson Vice President-
2727-A Allen Parkway Variable Products-Marketing
Houston, TX 77019

Pauletta P. Cohn Assistant Secretary
2929 Allen Parkway
Houston, TX 77019

Joyce R. Bilski Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

Timothy M. Donovan Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

Karen Harper Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

Laura Milazzo Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

Patricia L. Myles Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

Linda Price Administrative Officer
2727-A Allen Parkway
Houston, TX 77019

C-9
<PAGE>

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

The following is a list of American General Corporation's subsidiaries as of
February 29, 2000. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and
unless otherwise indicated, all subsidiaries are wholly owned. Inactive
subsidiaries are denoted by an asterisk (*).

<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- ------------------------------------------------------------------------- --------------
<S> <C>
AGC Life Insurance Company................................................ Missouri
American General Property Insurance Company/16/.......................... Tennessee
American General Property Insurance Company of Florida.................. Florida
American General Life and Accident Insurance Company/6/.................. Tennessee
American General Life Insurance Company/7/............................... Texas
American General Annuity Service Corporation............................ Texas
American General Life Companies......................................... Delaware
American General Life Insurance Company of New York..................... New York
The Winchester Agency Ltd. ............................................ New York
The Variable Annuity Life Insurance Company............................. Texas
Parkway 1999 Trust/17/................................................. Maryland
PESCO Plus, Inc/14/.................................................... Delaware
American General Gateway Services, L.L.C/15/........................... Delaware
The Variable Annuity Marketing Company................................. Texas
American General Financial Advisors, Inc. ............................. Texas
VALIC Retirement Services Company...................................... Texas
VALIC Trust Company.................................................... Texas
American General Assignment Corporation of New York.................... New York
The Franklin Life Insurance Company....................................... Illinois
The American Franklin Life Insurance Company............................. Illinois
Franklin Financial Services Corporation.................................. Delaware
HBC Development Corporation............................................... Virginia
Templeton American General Life of Bermuda, Ltd./13/...................... Bermuda
Western National Corporation.............................................. Delaware
WNL Holding Corp. ....................................................... Delaware
American General Annuity Insurance Company.............................. Texas
American General Assignment Corporation................................. Texas
American General Distributors, Inc. .................................... Delaware
A.G. Investment Advisory Services, Inc. ................................ Delaware
American General Financial Institutions Group, Inc. .................... Delaware
WNL Insurance Services, Inc. ........................................... Delaware
American General International, Inc. ..................................... Delaware
American General Enterprise Services, Inc. ............................... Delaware
American General Corporation*............................................. Delaware
American General Delaware Management Corporation/1/....................... Delaware
American General Finance, Inc. ........................................... Indiana
HSA Residential Mortgage Services of Texas, Inc. ........................ Delaware
AGF Investment Corp. .................................................... Indiana
American General Auto Finance, Inc. ..................................... Delaware
American General Finance Corporation/8/.................................. Indiana
American General Finance Group, Inc. ................................... Delaware
</TABLE>

C-10
<PAGE>

American General Financial Services, Inc./9 / Delaware
The National Life and Accident Insurance Company Texas
Merit Life Insurance Co. Indiana
Yosemite Insurance Company Indiana
American General Finance, Inc. Alabama
A.G. Financial Service Center, Inc. Utah
American General Bank, FSB Utah
American General Financial Center, Inc.* Indiana
American General Financial Center, Incorporated* Indiana
American General Financial Center Thrift Company* California
Thrift, Incorporated* Indiana
American General Investment Advisory Services, Inc.* Texas
American General Investment Holding Corporation/10/ Delaware
American General Investment Management, L.P./10/ Delaware
American General Investment Management Corporation/10/ Delaware
American General Realty Advisors, Inc. Delaware
American General Realty Investment Corporation Texas
AGLL Corporation/11/ Delaware
American General Land Holding Company Delaware
AG Land Associates, LLC/11/ California
GDI Holding, Inc.*/12/ California
Pebble Creek Service Corporation Florida
SR/HP/CM Corporation Texas
Green Hills Corporation Delaware
Knickerbocker Corporation Texas
American Athletic Club, Inc. Texas
Pavilions Corporation Delaware
USLIFE Corporation Delaware
All American Life Insurance Company Illinois
American General Assurance Company Illinois
American General Indemnity Company Nebraska
USLIFE Credit Life Insurance Company of Arizona Arizona
American General Life Insurance Company of Pennsylvania Pennsylvania
I.C. Cal* California
North Central Administrators, Inc. Minnesota
North Central Life Insurance Company Minnesota
North Central Caribbean Life, Ltd. Nevis
The Old Line Life Insurance Company of America Wisconsin
The United States Life Insurance Company in the City of New York New York
American General Bancassurance Services, Inc. Illinois
USMRP, Ltd. Turks & Caicos
USLIFE Realty Corporation Texas
USLIFE Real Estate Services Corporation Texas
USLIFE Systems Corporation Delaware
</TABLE>
American General Finance Foundation, Inc. is not included on this list. It is a
non-profit corporation.

C-11
<PAGE>

NOTES

/1/ The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:

American General Capital, L.L.C.
American General Delaware, L.L.C.

/2/ On November 26, 1996, American General Institutional Capital A ("AG Cap
Trust A"), a Delaware business trust, was created. On March 10, 1997,
American General Institutional Capital B ("AG Cap Trust B"), also a
Delaware business trust, was created. Both AG Cap Trust A's and AG Cap
Trust B's business and affairs are conducted through their trustees:
Bankers Trust Company and Bankers Trust (Delaware). Capital securities of
each are held by non-affiliated third party investors and common securities
of AG Cap Trust A and AG Cap Trust B are held by AGC.

/3/ On November 14, 1997, American General Capital I, American General Capital
II, American General Capital III, and American General Capital IV
(collectively, the "Trusts"), all Delaware business trusts, were created.
Each of the Trusts' business and affairs are conducted through its
trustees: Bankers Trust (Delaware) and James L. Gleaves (not in his
individual capacity, but solely as Trustee).

/4/ On July 10, 1997, the following insurance subsidiaries of AGC became the
direct owners of the indicated percentages of membership units of SBIL B,
L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%). Through their aggregate 40.3% interest
in SBIL B, VALIC, FL, AGLA and AGL indirectly own approximately 28% of the
securities of SBI, an English company, and 14% of the securities of ESBL,
an English company, SBP, an English company, and SBFL, a Cayman Islands
company. These interests are held for investment purposes only.

/5/ Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional
Provincial Pensions S.A. de C.V., a new holding company formed by GNP, one
of Mexico's largest financial services companies.

/6/ AGLA owns approximately 12% of Whirlpool Financial Corp. ("Whirlpool")
preferred stock. AGLA's holdings in Whirlpool represents approximately 3%
of the voting power of the capital stock of Whirlpool. The interests in
Whirlpool (which is a corporation that is not associated with AGC) are held
for investment purposes only.

/7/ AGL owns 100% of the common stock of American General Securities
Incorporated ("AGSI"), a full-service NASD broker-dealer. AGSI, in turn,
owns 100% of the stock of the following insurance agencies:

American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)

C-12
<PAGE>

In addition, the following agencies are indirectly related to AGSI, but not
owned or controlled by AGSI:
American General Insurance Agency of Ohio, Inc. (Ohio)
American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma)
Insurance Masters Agency, Inc. (Texas)

The foregoing indirectly related agencies are not affiliates or
subsidiaries of AGL under applicable holding company laws, but they are
part of the AGC group of companies under other laws.

/8/ American General Finance Corporation is the parent of an additional 42
wholly-owned subsidiaries incorporated in 25 states for the purpose of
conducting its consumer finance operations, in addition to those noted in
footnote 9 below.

/9/ American General Financial Services, Inc., is the direct or indirect parent
of an additional 8 wholly-owned subsidiaries incorporated in 5 states and
Puerto Rico for the purpose of conducting its consumer finance operations.

/10/ American General Investment Management, L.P., a Delaware limited
partnership, is jointly owned by AGIHC and AGIMC. AGIHC holds a 99% limited
partnership interest, and AGIMC owns a 1% general partnership interest.

/11/ AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.

/12/ AGRI owns a 75% interest in GDI Holding, Inc.

/13/ AGCL owns 50% of the common stock of TAG Life. Templeton International,
Inc., a Delaware corporation, owns the remaining 50% of TAG Life. Templeton
International, Inc. is not affiliated with AGC.

/14/ VALIC holds 90% of the outstanding common shares of PESCO Plus, Inc. The
Florida Education Association/United, a Florida teachers union and
unaffiliated third party, holds the remaining 10% of the outstanding common
shares.

/15/ VALIC holds 90% of the outstanding common shares of American General
Gateway Services, L.L.C. Gateway Investment Services, Inc., a California
corporation and an unaffiliated third party, holds the remaining 10% of the
outstanding common shares.

/16/ AGPIC is jointly owned by AGCL and AGLA. AGCL owns 51.85% and AGLA owns
48.15% of the issued and outstanding shares of AGPIC.

/17/ Parkway 1999 Trust was formed as a Maryland business trust to function as
an investment subsidiary. VALIC owns 100% of its common equity.

C-13
<PAGE>

COMPANY ABBREVIATIONS AS USED IN ITEM 26:
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
- ------------- ------------------------------------------------------- -----------
<S> <C> <C>

AAL All American Life Insurance Company.................... IL
AAth American Athletic Club, Inc............................ TX
AFLI The American Franklin Life Insurance Company........... IL
AGAIC American General Annuity Insurance Company............. TX
ASGN-NY American General Assignment Corporation of New York.... NY
AGAC American General Assurance Company..................... IL
AGAS American General Annuity Service Corporation........... TX
AGBS American General Distributors, Inc..................... DE
AGB American General Bank, FSB............................. UT
AGC American General Corporation........................... TX
AGCL AGC Life Insurance Company............................. MO
AGDMC American General Delaware Management Corporation....... DE
AGES American General Enterprise Services, Inc.............. DE
AGF American General Finance, Inc.......................... IN
AGFC American General Finance Corporation................... IN
AGFCI American General Financial Center, Incorporated........ IN
AGFCT American General Financial Center Thrift Company....... CA
AGFG American General Finance Group, Inc.................... DE
AGF Inv AGF Investment Corp.................................... IN
AGFn A.G. Financial Service Center, Inc..................... UT
AGFnC American General Financial Center, Inc................. IN
AGFS American General Financial Services, Inc............... DE
AGFA American General Financial Advisors, Inc............... TX
AGFIG American General Financial Institutions Group, Inc..... DE
AGGS American General Gateway Services, L.L.C............... DE
AGIA American General Insurance Agency, Inc................. MO
AGIAH American General Insurance Agency of Hawaii, Inc....... HI
AGIAM American General Insurance Agency of
Massachusetts, Inc................................... MA
AGIAO American General Insurance Agency of Ohio, Inc. OH
AGIAOK American General Insurance Agency of Oklahoma, Inc..... OK
AGIAS A.G. Investment Advisory Services, Inc................. DE
AGIAT American General Insurance Agency of Texas, Inc. TX
AGII American General International, Inc. DE
AGIHC American General Investment Holding Corporation DE
AGIM American General Investment Management, L.P. DE
AGIMC American General Investment Management Corporation DE
AGIND American General Indemnity Company..................... NE
AGL American General Life Insurance Company................ TX
AGLC American General Life Companies ....................... DE
AGLA American General Life and Accident Insurance Company... TN
AGLH American General Land Holding Company.................. DE
AGLL AGLL Corporation....................................... DE
</TABLE>

C-14
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
AGNY American General Life Insurance Company of New York.... NY
AGPA American General Life Insurance Company of Pennsylvania PA
AGPIC American General Property Insurance Company............ TN
AGRA American General Realty Advisors, Inc.................. DE
AGRI American General Realty Investment Corporation......... TX
AGSI American General Securities Incorporated............... TX
AGX American General Exchange, Inc......................... TN
ASGN American General Assignment Corporation................ TX
FFSC Franklin Financial Services Corporation................ DE
FL The Franklin Life Insurance Company.................... IL
GHC Green Hills Corporation................................ DE
HBDC HBC Development Corporation............................ VA
KC Knickerbocker Corporation.............................. TX
ML Merit Life Insurance Co................................ IN
NLA The National Life and Accident Insurance Company....... TX
NCA North Central Administrators, Inc...................... MN
NCL North Central Life Insurance Company................... MN
NCCL North Central Caribbean Life, Ltd...................... T&C
OLL The Old Line Life Insurance Company of America......... WI
PKWY Parkway 1999 Trust..................................... MD
PAV Pavilions Corporation.................................. DE
PCSC Pebble Creek Service Corporation....................... FL
PIFLA American General Property Insurance Company of Florida. FL
PPI PESCO Plus, Inc........................................ DE
RMST HSA Residential Mortgage Services of Texas, Inc........ DE
SRHP SR/HP/CM Corporation................................... TX
TAG Life Templeton American General Life of Bermuda, Ltd........ BA
TI Thrift, Incorporated................................... IN
UAS American General Bancassurance Services, Inc........... IL
UC USLIFE Corporation..................................... DE
UCLA USLIFE Credit Life Insurance Company of Arizona........ AZ
URC USLIFE Realty Corporation.............................. TX
USC USLIFE Systems Corporation............................. DE
USL The United States Life Insurance Company in the City of
New York............................................... NY
USMRP USMRP, Ltd............................................. T&C
VALIC The Variable Annuity Life Insurance Company............ TX
VAMCO The Variable Annuity Marketing Company................. TX
VRSCO VALIC Retirement Services Company...................... TX
VTC VALIC Trust Company TX
WA The Winchester Agency Ltd.............................. NY
WIS WNL Insurance Services, Inc............................ DE
WNC Western National Corporation........................... DE
WNLH WNL Holding Corp....................................... DE
YIC Yosemite Insurance Company............................. IN
</TABLE>

C-15
<PAGE>

ITEM 27. NUMBER OF CONTRACT OWNERS

As of March 17, 2000, there were 79 owners of Contracts of the class
presently offered by this Registration Statement.

ITEM 28. INDEMNIFICATION

Article VII, section 1, of the Company's By-Laws provides, in part, that
the Company shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that
such person is or was serving at the request of the Company, against
expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with such proceeding if such person
acted in good faith and in a manner such person reasonably believed to
be in the best interest of the Company and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of such
person was unlawful.

Article VII, section 1 (in part), section 2, and section 3, provide that
the Company shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action by or in the right of the Company to procure a judgment
in its favor by reason of the fact that such person is or was acting in
behalf of the Company, against expenses actually and reasonably incurred
by such person in connection with the defense or settlement of such
action if such person acted in good faith, in a manner such person
believed to be in the best interests of the Company, and with such care,
including reasonable inquiry, as an ordinarily prudent person in a like
position would use under similar circumstances. No indemnification
shall be made under section 1: (a) in respect of any claim, issue, or
matter as to which such person shall have been adjudged to be liable to
the Company, unless and only to the extent that the court in which such
action was brought shall determine upon application that, in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for the expenses which such court shall determine;
(b) of amounts paid in settling or otherwise disposing of a threatened
or pending action with or without court approval; or (c) of expense
incurred in defending a threatened or pending action which is settled or
otherwise disposed of without court approval.

Article VII, section 3, provides that, with certain exceptions, any
indemnification under Article VII shall be made by the Company only if
authorized in the specific case, upon a determination that
indemnification of the person is proper in the circumstances because the
person has met the applicable standard of conduct set forth in section 1
of Article VII by (a) a majority vote of a quorum consisting of
directors who are not parties to such proceeding; (b) approval of the
shareholders, with the shares owned by the person to be indemnified not
being entitled to vote thereon; or (c) the court in which such
proceeding is or was pending upon application made by the Company or the
indemnified person or the attorney or other persons rendering services
in connection with the defense, whether or not such application by the
attorney or indemnified person is opposed by the Company.

Article VII, section 7, provides that for purposes of Article VII, those
persons subject to indemnification include any person who is or was a
director, officer, or employee of the Company, or is or was serving at
the request of the Company as a director, officer, or

C-16
<PAGE>

employee of another foreign or domestic corporation which was a
predecessor corporation of the Company or of another enterprise at the
request of such predecessor corporation.

Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Registrant's principal underwriter, American General Securities
Incorporated, also acts as principal underwriter for American General
Life Insurance Company of New York Separate Account E, American
General Life Insurance Company Separate Accounts A and VL-R and The
United States Life Insurance Company in the City of New York Separate
Accounts USL VA-R and USL VL-R.

(b) The directors and principal officers of the principal underwriter
are:
<TABLE>
<CAPTION>
Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
------------------ -----------------------
<S> <C>
F. Paul Kovach, Jr. Director, Chairman,
American General Securities President and Chief Executive Officer
Incorporated
2727 Allen Parkway
Houston, Texas 77019

Donald W. Britton Director
American General Life
Companies
2929 Allen Parkway
Houston, Texas 77019

Royce G. Imhoff, II Director
American General Life
Insurance Company
2727-A Allen Parkway
Houston, Texas 77019
</TABLE>

C-17
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Alice T. Kane Director
American General Retirement
Services
125 Maiden Lane
New York, New York 10038

Rodney O. Martin, Jr. Director and Vice Chairman
American General Life
Companies
2929 Allen Parkway
Houston, Texas 77019

John A. Kalbaugh Vice President - Chief Marketing
American General Securities Officer
Incorporated
2727 Allen Parkway
Houston, Texas 77019

Robert M. Roth Vice President -
American General Securities Administration and Compliance,
Incorporated Treasurer and Secretary
2727 Allen Parkway
Houston, Texas 77019

Don M. Ward Vice President
American General Life
Companies
2727 Allen Parkway
Houston, Texas 77019

Julie A. Cotton Assistant Secretary
American General Life
Companies
2727 Allen Parkway
Houston, Texas 77019

Robert F. Herbert, Jr. Assistant Treasurer
American General Life
Companies
2727-A Allen Parkway
Houston, Texas 77019

D. Lynne Walters Assistant Tax Officer
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
</TABLE>

C-18
<PAGE>

ITEM 30. LOCATION OF RECORDS

All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-
1 through 31a-3 thereunder, are maintained and in the custody of American
General Life Companies at its principal executive office located at 2727-
A Allen Parkway, Houston, TX 77019.

ITEM 31. MANAGEMENT SERVICES

Not Applicable.

ITEM 32. UNDERTAKINGS

The Registrant undertakes: A) to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the Contracts may be
accepted; B) to include either (1) as part of any application to purchase
a Contract offered by a prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a toll-free number
or a post card or similar written communication affixed to or included in
the applicable prospectus that the applicant can use to send for a
Statement of Additional Information; C) to deliver any Statement of
Additional Information and any financial statements required to be made
available under this form promptly upon written or oral request.

REPRESENTATION REGARDING THE REASONABLENESS OF AGGREGATE FEES AND CHARGES
DEDUCTED UNDER THE CONTRACTS PURSUANT TO SECTION 26)(E)(2)(A) OF THE INVESTMENT
COMPANY ACT OF 1940

AGL represents that the fees and charges deducted under the Contracts, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by AGL.

C-19
<PAGE>

POWERS OF ATTORNEY

Each person whose signature appears below hereby appoints Thomas M. Zurek,
Robert F. Herbert, Jr. and Pauletta P. Cohn and each of them, any one of whom
may act without the joinder of the others, as his/her attorney-in-fact to sign
on his/her behalf and in the capacity stated below and to file all amendments to
this Registration Statement, which amendment or amendments may make such changes
and additions to this Registration Statement as such attorney-in-fact may deem
necessary or appropriate.

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, American General Life Insurance Company Separate Account
D, certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness of this amended Registration Statement and has duly caused this
Registration Statement to be signed on its behalf, in the City of Houston, and
State of Texas on this 30/th/ day of March, 2000.

AMERICAN GENERAL LIFE INSURANCE
COMPANY
SEPARATE ACCOUNT D
(Registrant)

BY: AMERICAN GENERAL LIFE INSURANCE
COMPANY the Registrant and
itself)

BY: /s/ ROBERT F. HERBERT, JR.
-----------------------------
Robert F. Herbert, Jr.
Senior Vice President, Treasurer
and Controller
[SEAL]

ATTEST: /s/ JULIE A. COTTON
-------------------------------
Julie A. Cotton
Assistant Secretary
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following officers and directors
of American General Life Insurance Company in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----

/s/ RONALD H. RIDLEHUBER Director, President and CEO March 30, 2000
- ------------------------
Ronald H. Ridlehuber

/s/ ROBERT F. HERBERT, JR. Director, Senior Vice
- -------------------------- President, Treasurer and Controller March 30, 2000
Robert F. Herbert, Jr.

/s/ DONALD W. BRITTON Director March 30, 2000
- ---------------------
Donald W. Britton

/s/ DAVID A. FRAVEL Director March 30, 2000
- --------------------
David A. Fravel

/s/ DAVID L. HERZOG Director March 30, 2000
- --------------------
David L. Herzog

/s/ ROYCE G. IMHOFF, II Director March 30, 2000
- ------------------------
Royce G. Imhoff, II

/s/ JOHN V. LAGRASSE Director March 30, 2000
- --------------------
John V. LaGrasse

Director
- -------------------------
Rodney O. Martin, Jr.

/s/ GARY D. REDDICK Director March 30, 2000
- -------------------
Gary D. Reddick

/s/ THOMAS M. ZUREK Director March 30, 2000
- -------------------
Thomas M. Zurek

</TABLE>
<PAGE>

EXHIBIT INDEX

10 Consent of Independent Auditors

<PAGE>

EXHIBIT 10

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference made to our firm under the caption "Independent
Auditors" and to the use of our report dated February 7, 2000, as to the Select
Reserve Divisions of American General Life Insurance Company Separate Account D,
and March 1, 2000, as to American General Life Insurance Company, in Post-
Effective Amendment No. 4 to the Registration Statement (Form N-4 No. 333-40637
and 811-2441) of American General Life Insurance Company Separate Account D.

/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP

Houston, Texas
March 29, 2000