<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 2000
REGISTRATION NOS. 333-67605/811-8862
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
---------------------
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2 [X]
Post Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 18 [X]
</TABLE>
---------------------
A.G. SEPARATE ACCOUNT A
(EXACT NAME OF REGISTRANT)
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
(NAME OF DEPOSITOR)
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 526-5251
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------------
PAULETTA P. COHN, ESQ.
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------
TITLE OF SECURITIES BEING REGISTERED: Individual
Variable Annuity Contracts
SEQUENTIAL NUMBER SYSTEM: PAGE OF PAGES
EXHIBIT INDEX ON SEQUENTIAL PAGE NUMBER
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AT THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
UNITS OF INTEREST UNDER FLEXIBLE PREMIUM INDIVIDUAL FIXED AND
VARIABLE DEFERRED ANNUITY CONTRACTS
ELITEPLUS(R) VALUE
A.G. SEPARATE ACCOUNT A
August 1, 2000
PROSPECTUS
Under the Flexible Premium Fixed and Variable Deferred Annuity Contracts (the
"Contracts") described in this prospectus, you may accumulate Account Value on a
fixed or variable basis and receive annuity payments on a fixed or variable
basis. We designed the Contracts for use by individuals in retirement plans on a
Qualified or Non-Qualified basis.
The Contract permits you to invest in and receive retirement benefits in up to 3
Fixed Account Options and/or an array of up to 15 Variable Account Options
described in this prospectus.
--------------------------------------------------------------------------------
American General Annuity Insurance Company (the "Company") 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. The
Company's membership in IMSA applies to the Company only and not to its products
or affiliates.
This prospectus provides you with information you should know before investing
in the Contract. This prospectus is accompanied by the current prospectuses for
the mutual fund options described in this prospectus. Please read and retain
each of these prospectuses for future reference.
A Statement of Additional Information, dated August 1, 2000, has been filed with
the Securities and Exchange Commission ("SEC") and is available along with other
related materials at the SEC's internet web site (http://www.sec.gov). This
Statement of Additional Information contains additional information about the
Contract and is part of this prospectus. For a free copy, complete and return
the form contained in the back of this prospectus or call 1-800-424-4990.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENT IN THE
CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE OWNER'S INVESTMENT
TO FLUCTUATE, AND WHEN THE CONTRACTS ARE SURRENDERED, THE VALUE MAY BE HIGHER OR
LOWER THAN THE PURCHASE PAYMENTS.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE PROSPECTUS............................... 1
FEE TABLE.......................................... 2
SUMMARY............................................ 4
Fixed and Variable Options..................... 4
Guaranteed Death Benefit....................... 5
Transfers...................................... 5
Fees and Charges............................... 5
Payout Options................................. 5
Federal Tax Information........................ 5
Purchase Requirements.......................... 6
SELECTED PURCHASE UNIT DATA........................ 7
GENERAL INFORMATION................................ 8
About the Contract............................. 8
About the Company.............................. 8
About A.G. Separate Account A.................. 8
Units of Interest.............................. 9
Distribution of the Contracts.................. 9
VARIABLE ACCOUNT OPTIONS........................... 10
PURCHASE PERIOD.................................... 11
Purchase Payments.............................. 11
Right to Return................................ 11
Purchase Units................................. 11
Calculation of Purchase Unit Value............. 11
Choosing Investment Options.................... 12
Fixed Account Options..................... 12
Variable Account Options.................. 12
Stopping Purchase Payments..................... 12
TRANSFERS BETWEEN INVESTMENT OPTIONS............... 13
During the Purchase Period..................... 13
During the Payout Period....................... 13
Communicating Transfer or Reallocation
Instructions................................. 13
Sweep Account Program.......................... 14
Effective Date of Transfer..................... 14
Reservation of Rights and Market Timing........ 14
Dollar Cost Averaging Program.................. 14
Portfolio Rebalancing Program.................. 15
FEES AND CHARGES................................... 16
Account Maintenance Fee........................ 16
Surrender Charge............................... 16
Amount of Surrender Charge................ 16
10% Free Withdrawal....................... 16
Exceptions to Surrender Charge............ 16
Premium Tax Charge............................. 17
Separate Account Charges....................... 17
Fund Annual Expense Charges.................... 17
Other Tax Charges.............................. 17
PAYOUT PERIOD...................................... 18
Fixed Payout................................... 18
Variable Payout................................ 18
Combination Fixed and Variable Payout.......... 18
Payout Date.................................... 18
Payout Options................................. 18
Payout Information............................. 19
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SURRENDER OF ACCOUNT VALUE......................... 20
When Surrenders Are Allowed.................... 20
Amount That May Be Surrendered................. 20
Surrender Restrictions......................... 20
Partial Surrender.............................. 20
Systematic Withdrawal Program.................. 20
Distributions Required By Federal Tax Law...... 21
EXCHANGE PRIVILEGE................................. 22
Restrictions on Exchange Privilege............. 22
Charges and Taxes.............................. 22
DEATH BENEFITS..................................... 23
Beneficiary Information........................ 23
Special Information for Individual Non-Tax
Qualified Contracts.......................... 23
Joint Owner Spousal Election Information....... 23
During the Purchase Period..................... 23
During the Payout Period....................... 23
HOW TO REVIEW INVESTMENT PERFORMANCE OF SEPARATE
ACCOUNT DIVISIONS................................ 24
Types of Investment Performance Information
Advertised................................... 24
Total Return Performance Information......... 24
Standard Average Annual Total Return......... 24
Nonstandard Average Annual Total Return...... 24
Cumulative Total Return...................... 24
Annual Change in Purchase Unit Value......... 25
Cumulative Change in Purchase Unit Value..... 25
Total Return Based on Different Investment
Amounts................................... 25
An Assumed Account Value of $10,000.......... 25
Yield Performance Information................ 25
AGSPC Money Market Division.................. 25
Divisions Other Than Money Market
Divisions................................. 25
PERFORMANCE INFORMATION............................ 25
Average Annual Total Return, Cumulative Return
and Annual and Cumulative Change in Purchase
Unit Value Tables............................ 25
OTHER CONTRACT FEATURES............................ 29
Change of Beneficiary.......................... 29
Cancellation -- The 10 Day "Free Look"......... 29
We Reserve Certain Rights...................... 29
VOTING RIGHTS...................................... 30
Who May Give Voting Instructions............... 30
Determination of Fund Shares Attributable to
Your Account................................. 30
During Purchase Period....................... 30
During Payout Period or after a Death Benefit
Has Been Paid............................. 30
How Fund Shares Are Voted...................... 30
FEDERAL TAX MATTERS................................ 31
Type of Plans.................................. 31
Tax Consequences in General.................... 31
Effect of Tax-Deferred Accumulations........... 32
The Power of Tax-Deferred Growth............... 32
YEAR 2000.......................................... 34
Year 2000 Risks................................ 34
</TABLE>
<PAGE> 4
ABOUT THE PROSPECTUS
--------------------------------------------------------------------------------
Unless otherwise specified in this prospectus, the words we, our, Company and
AGAIC mean American General Annuity Insurance Company. The words you and your,
unless otherwise specified in this prospectus, mean the contract owner,
annuitant or beneficiary.
We will use a number of other specific terms in this prospectus. We will, when
that term is used in this prospectus, provide you with a definition of that
term. The terms used in this prospectus for which we will provide you a
definition are:
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
------------- --------
<S> <C>
Account Value.............. 13
A.G. Separate Account A.... 30
Annuitant.................. 23
Annuity Service Center..... 13
Assumed Investment Rate.... 18
Beneficiary................ 23
Contract Anniversary....... 5,13,16,23
Contract Owner............. 30
Contract Year.............. 13,16
Divisions.................. 24
Fixed Account Options...... 23
Mutual Fund or Fund........ 8
Payout Period.............. 13
Payout Unit................ 18
Purchase Payments.......... 11,24
Purchase Period............ 13
Purchase Unit.............. 11
Variable Account Options... 10,23
</TABLE>
This prospectus is being given to you to help you make decisions for selecting
various investment options and benefits to plan and save for your retirement. It
is intended to provide you with information about the Company, the Contract, and
saving for your retirement.
The purpose of Variable Account Options and Variable Payout Options is to
provide you investment returns which are greater than the effects of inflation.
We cannot, however, guarantee that this purpose will be achieved.
This prospectus describes a contract in which units of interest in the A.G.
Separate Account A are offered. The Contract will allow you to accumulate
retirement dollars in Fixed Account Options and/or Variable Account Options.
This prospectus describes only the variable aspects of the Contract except where
the Fixed Account Options are specifically mentioned.
For specific information about the Variable Account Options, you should refer to
the mutual fund prospectuses you have been given with this document. You should
keep these prospectuses to help answer any questions you may have in the future.
Following this introduction is a summary of the major features and options of
the Contract. It is intended to provide you with a brief overview of those
sections discussed in more detail in this prospectus.
1
<PAGE> 5
FEE TABLE
--------------------------------------------------------------------------------
CONTRACT OWNER EXPENSES(1)
<TABLE>
<S> <C>
Maximum Surrender Charge.............................................................. 7.00%
(as a percentage of the Purchase Payment withdrawn and based
on the length of time from when each Purchase Payment was received)
Transfer Fee(2)....................................................................... $25
or 2% of the
amount transferred
ACCOUNT MAINTENANCE FEE(3).............................................................. $30
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of Average Account Value):
<TABLE>
<S> <C>
Mortality and Expense Risk Fee........................................................ 0.70%
Administration Fee.................................................................... .15%
-----
Total Separate Account Fee..................................................... 0.85%
</TABLE>
---------------
(1) Premium taxes are not shown here, but may be charged by some states. See:
"Premium Tax Charge" in this prospectus.
(2) Currently, no transfer fee is imposed on transfers. The Company reserves the
right to impose such a fee in the future which will not exceed the lesser of
$25 or 2% of the amount transferred. See the "Transfers Between Investment
Options" section of this prospectus.
(3) During the Purchase Period, if the Account Value on a Contract Anniversary
is at least $25,000, then no Account Maintenance Fee will be deducted for
that Contract Year. See the "Fees and Charges" section in this prospectus.
FUND ANNUAL EXPENSES
(as a percentage of net assets):
<TABLE>
<CAPTION>
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT EXPENSES
FEES (AFTER 12b-1 OTHER (AFTER
FUND FEE WAIVER) FEES EXPENSES(1) FEE WAIVER)
---- ----------- ----- ----------- -----------
<S> <C> <C> <C> <C>
AGSPC Government Securities Fund(2) 0.50% -- 0.09% 0.59%
AGSPC Growth and Income Fund(2) 0.75 -- 0.07 0.82
AGSPC International Equities Fund(2) 0.35 -- 0.08 0.43
AGSPC Money Market Fund(2) 0.50 -- 0.07 0.57
AGSPC Stock Index Fund(2) 0.26 -- 0.06 0.32
AIM V.I. Capital Appreciation Fund(2) 0.62 -- 0.11 0.73
AIM V.I. Diversified Income Fund(2) 0.60 -- 0.23 0.83
OCCAT Managed Portfolio(3) 0.77 -- 0.06 0.83
Oppenheimer Capital Appreciation Fund/VA(2) 0.68 -- 0.02 0.70
Oppenheimer High Income Fund/VA(2) 0.74 -- 0.01 0.75
Oppenheimer Main Street Growth & Income Fund/VA(2) 0.73 -- 0.05 0.78
Oppenheimer Small Cap Growth Fund/VA(2)(4) 0.75 -- 0.59 1.34
Templeton Developing Markets Securities Fund -- Class
2(2)(5)(6) 1.25 0.25% 0.31 1.81
Templeton International Securities Fund -- Class 2(2)(6)(7) 0.69 0.25 0.19 1.13
Van Kampen LIT Emerging Growth Portfolio(2)(8) 0.67 -- 0.18 0.85
</TABLE>
------------
(1) OTHER EXPENSES includes custody, accounting, reports to shareholders, audit,
legal, administrative and other miscellaneous expenses. See each Fund's
prospectus for a detailed explanation of these fees.
(2) The Company has entered into certain arrangements under which it is
compensated by the Fund's advisers or administrators for administrative
services the Company provides to the Funds.
(3) The management fees reflect effective management fees after taking into
effect any waiver. Other expenses are shown net of certain expense offsets
afforded the Portfolio. Total annual portfolio operating expenses for the
Portfolio are limited by OpCap Advisors so that their respective annualized
operating expenses (net of expense offsets) do not exceed 1.00% of the
Portfolio's average daily net assets.
(4) Other Expenses for the Oppenheimer Small Cap Growth Fund/VA are net of
voluntary assumption of 0.49% in Other Expenses by the Fund's adviser.
(5) On February 8, 2000, shareholders of the Templeton Developing Markets Fund
approved a merger and reorganization that combined the Templeton Developing
Markets Fund with the Templeton Developing Markets Equity Fund, effective
May 1, 2000. At the same time as the merger, the Templeton Developing
Markets Fund changed its name to the Templeton Developing Markets Securities
Fund. The table shows restated total expenses for the Templeton Developing
Markets Securities Fund based on the new fund fees and the assets of the
Templeton Developing Markets Fund as of December 31, 1999, and not the
assets of the combined fund. However, if the table reflected both the new
fund fees and the fund's combined assets, the fund's expenses after May 1,
2000 would be estimated as: Management Fees 1.25%, 12b-1 Fees 0.25%, Other
Expenses 0.29%, and Total Annual Portfolio Expenses 1.79%.
(6) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus.
(7) On February 8, 2000, shareholders of the Templeton International Fund
approved a merger and reorganization that combined the Templeton
International Fund with the Templeton International Equity Fund, effective
May 1, 2000. At the same time as the merger, the Templeton International
Fund changed its name to the Templeton International Securities Fund. The
table shows restated total expenses for the Templeton International
Securities Fund based on the new fund fees and the assets of the Templeton
International Fund as of December 31, 1999, and not the assets of the
combined fund. However, if the table reflected both the new fund fees and
the fund's combined assets, the fund's expenses after May 1, 2000 would be
estimated as: Management Fees 0.65%, 12b-1 Fees 0.25%, Other Expenses 0.20%,
and Annual Expenses 1.10%.
(8) In the absence of management fee waiver, management fees, other expenses and
total annual portfolio operating expenses, respectively, for the Van Kampen
LIT Emerging Growth Portfolio would be: 0.70%, 0.18%, and 0.88%.
2
<PAGE> 6
EXAMPLE #1 -- If you do not surrender the Contract at the end of the period
shown or you receive Payout Payments under a Payout Option with either a life
contingency or for a guaranteed period of at least five years:(1)
--------------------------------------------------------------------------------
Total Expenses. You would pay the following expenses on a $1,000 investment
under the Contract without a surrender charge imposed, invested in a single
Separate Account Division as listed below, assuming a 5% annual return on
assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS(2) 10 YEARS(2)
------ ------- ---------- -----------
<S> <C> <C> <C> <C>
AGSPC Government Securities Fund Division 4 $15 $47 N/A N/A
AGSPC Growth and Income Fund Division 1 17 54 N/A N/A
AGSPC International Equities Fund Division 2 13 42 N/A N/A
AGSPC Money Market Portfolio Division 6 15 46 N/A N/A
AGSPC Stock Index Fund Division 5 12 38 N/A N/A
AIM V.I. Capital Appreciation Fund Division 8 16 51 N/A N/A
AIM V.I. Diversified Income Fund Division 9 17 54 N/A N/A
OCCAT Managed Portfolio Division 3 17 54 N/A N/A
Oppenheimer Capital Appreciation Fund/VA Division 10 16 50 N/A N/A
Oppenheimer High Income Fund/VA Division 12 17 52 N/A N/A
Oppenheimer Main Street Growth & Income Fund/VA Division 11 17 53 N/A N/A
Oppenheimer Small Cap Growth Fund/VA Division 13 23 70 N/A N/A
Templeton Developing Markets Securities Fund -- Class 2
Division 14 27 84 N/A N/A
Templeton International Securities Fund -- Class 2 Division
15 20 63 N/A N/A
Van Kampen LIT Emerging Growth Portfolio Division 7 18 55 N/A N/A
</TABLE>
EXAMPLE #2 -- If you surrender the Contract at the end of the period shown or
you receive Payout Payments under a Payout Option without a life contingency for
a guaranteed period of less than five years:(1)
--------------------------------------------------------------------------------
Total Expenses. You would pay the following expenses on a $1,000 investment
under the Contract invested in a single Separate Account Division as listed
below, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS(2) 10 YEARS(2)
------ ------- ---------- -----------
<S> <C> <C> <C> <C>
AGSPC Government Securities Fund Division 4 $85 $ 97 N/A N/A
AGSPC Growth and Income Fund Division 1 87 104 N/A N/A
AGSPC International Equities Fund Division 2 83 92 N/A N/A
AGSPC Money Market Fund Division 6 85 96 N/A N/A
AGSPC Stock Index Fund Division 5 82 88 N/A N/A
AIM V.I. Capital Appreciation Fund Division 8 86 101 N/A N/A
AIM V.I. Diversification Income Fund Division 9 87 104 N/A N/A
OCCAT Managed Portfolio Division 3 87 104 N/A N/A
Oppenheimer Capital Appreciation Fund/VA Division 10 86 100 N/A N/A
Oppenheimer High Income Fund/VA Division 12 87 102 N/A N/A
Oppenheimer Main Street Growth & Income Fund/VA Division 11 87 102 N/A N/A
Oppenheimer Small Cap Growth Fund/VA Division 13 93 119 N/A N/A
Templeton Developing Market Securities Fund -- Class 2
Division 14 97 132 N/A N/A
Templeton International Securities Fund -- Class 2 Division
15 90 113 N/A N/A
Van Kampen LIT Emerging Growth Portfolio Division 7 88 104 N/A N/A
</TABLE>
Note: These examples should not be considered representations of past or future
expenses for A.G. Separate Account A or for any Fund. Actual expenses may be
greater or less than those shown above. Similarly, the 5% annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance. The purpose of the Fee Table above is to help Contract Owners
understand the various expenses of A.G. Separate Account A and the Funds which
are, in effect, passed on to the Contract Owners.
This Fee Table shows all charges and expenses which may be deducted from the
assets of A.G. Separate Account A and from the Funds in which A.G. Separate
Account A invests. For a further description of these charges and expenses, see
"Fees and Charges" in this prospectus and the descriptions of fees and charges
in each of the Fund's prospectuses. Any and all limitations on total charges and
expenses are reflected in this Fee Table.
(1) Payout Payments under a Payout Option may not commence prior to the end of
the fourth Contract Year.
(2) "N/A" indicates that SEC rules require that the Divisions complete Examples
for only the one and three year period.
3
<PAGE> 7
SUMMARY
--------------------------------------------------------------------------------
The Contract is a combination fixed and variable annuity that offers you a wide
choice of investment options and flexibility. A summary of the Contract's major
features is presented below. For a more detailed discussion of the Contract,
please read this entire prospectus carefully.
FIXED AND VARIABLE OPTIONS
The Contract offers a choice from among 15 Variable Account Options. The
Contract also offers three Fixed Account Options, two of which, the DCA One Year
Guarantee Period Option and the DCA Six Month Guarantee Period Option, are
available only for dollar cost averaging. See the "Dollar Cost Averaging
Program" section of this prospectus.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
FIXED ACCOUNT
OPTIONS
---------------------------------------------------------------------------------------------------------------------
FIXED One Year Guaranteed current interest income -- --
OPTIONS Guarantee
Period ("One
Year Fixed
Account")
-----------------------------------------------------------------------------------------------------------
DCA One Year Guaranteed current interest income -- --
Guarantee
Period ("DCA
One Year Fixed
Account")
-----------------------------------------------------------------------------------------------------------
DCA Six Month Guaranteed current interest income -- --
Guarantee
Period ("DCA
Six Month Fixed
Account")
---------------------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OBJECTIVE ADVISER SUB-ADVISER
ACCOUNT
OPTIONS
---------------------------------------------------------------------------------------------------------------------
EQUITY AGSPC Growth Seeks to provide long-term growth VALIC --
FUNDS and Income of capital and, secondarily,
Fund* current income through investment
in common stocks and equity-related
securities.
-----------------------------------------------------------------------------------------------------------
AGSPC Seeks to provide long-term growth VALIC --
International of capital through investments
Equities Fund* primarily in a diversified
portfolio of equity and equity
related securities of foreign
issuers that, as a group, are
expected to provide investment
results closely corresponding to
the performance of the EAFE Index.
-----------------------------------------------------------------------------------------------------------
AGSPC Stock Seeks long-term capital growth VALIC --
Index Fund* through investment in common stocks
that, as a group, are expected to
provide investment results closely
corresponding to the performance of
the Standard & Poor's 500 Stock
Index(R).
-----------------------------------------------------------------------------------------------------------
AIM V.I. Growth of capital through A I M Advisors, Inc. --
Capital investments in common stocks, with
Appreciation emphasis on medium-sized and
Fund** smaller growth companies.
-----------------------------------------------------------------------------------------------------------
OCCAT Managed Growth through investments in OpCap Advisors PIMCO Advisors
Portfolio***** common stocks, L.P.
bonds and cash equivalents.
-----------------------------------------------------------------------------------------------------------
Oppenheimer Seeks to achieve capital OppenheimerFunds, Inc. --
Capital appreciation by investing in
Appreciation securities of well-known
Fund/VA*** established companies.
-----------------------------------------------------------------------------------------------------------
Oppenheimer Seeks high total return (which OppenheimerFunds, Inc. --
Main Street includes growth in the value of its
Growth & Income shares as well as current income)
Fund/VA*** from equity and debt related
securities. From time to time, the
Fund may focus on small to medium
capitalization common stocks, bonds
and convertible securities.
-----------------------------------------------------------------------------------------------------------
Oppenheimer Seeks to provide capital OppenheimerFunds, Inc. --
Small Cap appreciation primarily through
Growth investments in securities of small
Fund/VA*** cap companies with a market
capitalization of up to $1.8
billion.
-----------------------------------------------------------------------------------------------------------
Templeton Seeks long-term capital Templeton Asset --
Developing appreciation. The Fund invests Management, Ltd.
Markets primarily in emerging market equity
Securities securities.
Fund --
Class 2****
-----------------------------------------------------------------------------------------------------------
Templeton Seeks long-term capital growth. The Templeton Investment --
International Fund invests primarily in stocks of Counsel, Inc.
Securities companies located outside the
Fund -- Class United States, including those in
2**** emerging markets.
-----------------------------------------------------------------------------------------------------------
Van Kampen LIT Capital appreciation by investing Van Kampen Asset --
Emerging Growth in common stocks of emerging growth Management Inc.
Portfolio****** companies.
---------------------------------------------------------------------------------------------------------------------
INCOME AGSPC Seeks high current income and VALIC --
FUNDS Government protection of capital through
Securities investments in intermediate and
Fund* long-term U.S. Government debt
securities.
-----------------------------------------------------------------------------------------------------------
AIM V.I. Achieve a high level of current A I M Advisors, Inc. --
Diversified income.
Income Fund**
-----------------------------------------------------------------------------------------------------------
Oppenheimer Seeks to provide a high level of OppenheimerFunds, Inc. --
High Income current income from investment in
Fund/VA*** high yield fixed-income securities.
---------------------------------------------------------------------------------------------------------------------
MONEY AGSPC Money Seeks liquidity, protection of VALIC --
MARKET Market Fund* capital and current income through
FUND investments in short-term money
market securities.
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* A series of American General Series Portfolio Company ("AGSPC").
** A series of AIM Variable Insurance Funds.
*** A series of Oppenheimer Variable Account Funds.
**** A series of Franklin Templeton Variable Insurance Products Trust.
***** A series of OCC Accumulation Trust ("OCCAT").
****** A series of Van Kampen Life Investment Trust.
4
<PAGE> 8
SUMMARY -- (CONTINUED)
--------------------------------------------------------------------------------
A detailed description of the investment objective of each Fund can also be
found in each Fund's current prospectus.
GUARANTEED DEATH BENEFIT
The Contract offers a death benefit equal to the greater of:
- Net Purchase Payments (Purchase Payments less any partial surrenders), or
- Account Value as of the end of the Valuation Period immediately following
receipt of proof of death and the election of the death benefit payment.
TRANSFERS
You may transfer money in your account among the Contract's investment options
free of charge. We reserve the right, however, to impose a fee of $25 or 2% of
the amount transferred for each transfer which will be deducted from the amount
transferred. During the Purchase Period, you may transfer your Account Values
among the Variable Account Options and between the Variable Account Options and
the One Year Fixed Account Option once each day. However, if you make a transfer
from the One Year Fixed Account Option into one or more Variable Account Options
you will be required to wait six months before you will be allowed to make a
transfer from one or more Variable Account Options back into the One Year Fixed
Account Option.
Once you begin receiving payments from your account (called the Payout Period),
you may still transfer funds among the Variable Account Options and from the
Variable Account Options to the One Year Fixed Account Option.
Transfers can be made by calling the Company's toll-free transfer service at
1-800-424-4990. For more information on account transfers, see the "Transfers
Between Investment Options" section in this prospectus.
FEES AND CHARGES
ACCOUNT MAINTENANCE FEE
On each Contract Anniversary, the Company deducts an Account Maintenance Fee of
$30 from your Account Value during the Purchase Period. The fee is deducted
proportionately from each investment option. If the Account Value on a Contract
Anniversary is at least $25,000, the Company will waive the fee for the
following Contract Year.
SURRENDER CHARGE
Under some circumstances a surrender charge is made to your account. These
situations are discussed in detail in the section of the prospectus entitled
"Fees and Charges -- Surrender Charge." When this happens the surrender charge
is computed as a percent of the total Purchase Payments withdrawn based on the
length of time from when each Purchase Payment was received up to a maximum of
7.0% of Purchase Payments.
Withdrawals are always subject to federal tax restrictions, which generally
include a tax penalty on withdrawals made prior to age 59 1/2.
PREMIUM TAX CHARGE
Premium taxes ranging from zero to 3 1/2% are currently imposed by certain
states and municipalities on Purchase Payments made under the Contract.
SEPARATE ACCOUNT CHARGES
If you choose a Variable Account Option you will incur a mortality and expense
risk fee and an administration fee computed at an aggregate annualized rate of
0.70% and 0.15%, respectively, on the average daily net asset value of the A.G.
Separate Account A.
FUND ANNUAL EXPENSE CHARGE
A daily charge based on a percentage of each Fund's average daily net asset
value is payable by each Fund to its investment adviser. In addition to the
management fees, each Fund incurs other operating expenses which may vary.
PAYOUT OPTIONS
When you withdraw your money, you can select from several payout options: a
lifetime annuity (which guarantees payment for as long as you live), periodic
withdrawals and systematic withdrawals. More information on payout options can
be found in the "Payout Period" section of this prospectus.
FEDERAL TAX INFORMATION
Although deferred annuity contracts such as the Contract can be purchased with
after-tax dollars, they are also used in connection with retirement programs
which receive favorable tax treatment under federal law.
More information on FEES
may be found in this
prospectus under the
headings "FEES AND
CHARGES" AND "FEE TABLE."
For a more detailed
discussion of these income
tax provisions, see the
"FEDERAL TAX MATTERS"
section of this prospectus and
of the Statement of Additional
Information.
For more information on
PURCHASE PAYMENTS, refer
to the "Purchase Period"
section of this prospectus.
CONTRACT ANNIVERSARY -- the
date that the contract
is issued and each
yearly anniversary
of that date thereafter.
5
<PAGE> 9
SUMMARY --(CONTINUED)
--------------------------------------------------------------------------------
PURCHASE REQUIREMENTS
The minimum initial Purchase Payment for Non-Qualified Contracts is $5,000 and
for Qualified Contracts is $2,000. The minimum subsequent Purchase Payment is
$1,000 for Non-Qualified Contracts and $250 for Qualified Contracts. The minimum
amount per a preauthorized debit Purchase Payment under the Automatic Check
Option is $50. More information about the Automatic Check Option can be found in
the "Purchase Period" section of this prospectus.
6
<PAGE> 10
Selected Purchase Unit Data
--------------------------------------------------------------------------------
The Contract is a new variable annuity product; therefore, there is no Selected
Purchase Unit Data available at this time.
7
<PAGE> 11
GENERAL INFORMATION
--------------------------------------------------------------------------------
ABOUT THE CONTRACT
The Contract was developed to help you save money for your retirement. It offers
you a combination of fixed and variable options that you can invest in to help
you reach your retirement savings goals. Your contributions to the Contract can
come from different sources, like payroll deductions or money transfers. Your
retirement savings process with the Contract will involve two stages: the
Purchase Period; and the Payout Period. The first is when you make contributions
into the Contract called "Purchase Payments." The second, is when you receive
your retirement payouts. For more information, see "Purchase Period" and "Payout
Period" in this prospectus.
You may choose, depending upon your retirement savings goals and your personal
risk tolerances, to invest in the Fixed Account Options and/or the Variable
Account Options described in this prospectus. When you decide to retire, or
otherwise withdraw your money, you can select from a wide array of payout
options including both fixed and variable payments. In addition, this prospectus
will describe for you all fees and charges that may apply to your participation
in the Contract.
ABOUT THE COMPANY
We are a life insurance company organized on July 5, 1944 and located in the
State of Texas. Our main business is issuing and offering fixed and variable
retirement annuity contracts, like the Contract. Our principal offices are
located at 2929 Allen Parkway, Houston, Texas 77019. Our Annuity Service Center
is located at 205 E. 10th Avenue, Amarillo, Texas 79101. The address to send any
Purchase Payments and sums payable to the Company under the Contract is:
American General Annuity Insurance Company, P.O. Box 5429, Boston, MA
02206-5429, if sent by mail; and State Street Bank and Trust Company, Attention
Lock Box A3W, 1776 Heritage Drive, North Quincy, MA 02171, if sent by overnight
delivery. The Company primarily distributes its annuity contracts through
financial institutions, general agents, and specialty brokers.
On February 25, 1998, the Company became an indirect, wholly-owned subsidiary of
American General Corporation. On this date the Company changed its name from
Western National Life Insurance Company to American General Annuity Insurance
Company. Members of the American General Corporation group of companies operate
in each of the 50 states, the District of Columbia, and Canada and collectively
provide financial services with activities heavily weighted toward insurance.
American General Financial Group is the marketing name for American General
Corporation and its subsidiaries.
The Company 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. The Company's membership in IMSA applies to the
Company only and not its products or affiliates.
ABOUT A.G. SEPARATE ACCOUNT A
When you direct money to the Contract's Variable Account Options, you will be
sending that money through A.G. Separate Account A. You do not invest directly
in the Mutual Funds made available in the Contract. A.G. Separate Account A
invests in the Mutual Funds on behalf of your account. A.G. Separate Account A
is made up of what we call "Divisions." Fifteen Divisions are available and
represent the Variable Account Options in the Contract. Each of these Divisions
invests in a different Mutual Fund made available through the Contract. For
example, Division Twelve represents and invests in the Oppenheimer High Income
Fund/VA. The earnings (or losses) of each Division are credited to (or charged
against) the assets of that Division, and do not affect the performance of the
other Divisions of A.G. Separate Account A.
The Company established A.G. Separate Account A on November 9, 1994 under Texas
insurance law. Prior to May 1, 1999, A.G. Separate Account A was known as AGA
Separate Account A. A.G. Separate Account A is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 (1940 Act). Units of
interest in A.G. Separate Account A are registered as securities under the
Securities Act of 1933 (1933 Act).
A.G. Separate Account A is administered and accounted for as part of the
Company's business operations. However, the income, capital gains or capital
losses, whether or not realized, of each Division of A.G. Separate Account A are
credited to or charged against the assets held in that Division without regard
to the income, capital gains or capital losses of any other Division or arising
out of any other business the Company may conduct. In accordance with the terms
of the Contract, A.G. Separate Account A may not be charged with the liabilities
of any other
All inquiries regarding
THE CONTRACT
may be directed to the
Annuity Service Center
at the address shown.
MUTUAL FUND OR FUND --
the investment portfolio(s)
of a registered open-end
management investment
company, which serves as
the underlying investment
vehicle for each Division
represented in A.G.
Separate Account A.
For more information about
THE COMPANY, see the Statement
of Additional Information.
8
<PAGE> 12
--------------------------------------------------------------------------------
Company operation. The Texas Insurance Code requires that the assets of A.G.
Separate Account A attributable to the Contract be held exclusively for the
benefit of the contract owner, annuitants, and beneficiaries of the Contract.
When we discuss performance information in this prospectus, we mean the
performance of an A.G. Separate Account A Division.
UNITS OF INTERESTS
Your investment in a Division of A.G. Separate Account A is represented by units
of interest issued by A.G. Separate Account A. On a daily basis, the units of
interests issued by A.G. Separate Account A are revalued to reflect that day's
performance of the underlying Mutual Fund minus any applicable fees and charges
to A.G. Separate Account A.
DISTRIBUTION OF THE CONTRACTS
American General Distributors, Inc. ("Distributor"), an affiliate of the
Company, acts as the distributor for A.G. Separate Account A. Distributor was
formerly known as A.G. Distributors, Inc.
The Company will pay the registered representatives who sell the Contracts a
commission. Currently, the commission paid by the Company will not be greater
than 5 1/2% of Purchase Payments. The commissions paid by the Company are for
certain promotional and distribution expenses associated with the marketing of
the Contracts.
For more information about
DISTRIBUTOR, see the Statement
of Additional Information.
DISTRIBUTOR'S address is
2929 Allen Parkway,
Houston, Texas 77019.
9
<PAGE> 13
VARIABLE ACCOUNT OPTIONS
--------------------------------------------------------------------------------
Each individual Division represents and invests, through A.G. Separate Account
A, in specific Mutual Funds. These Mutual Funds serve as the investment vehicles
for the Contract and include:
- AIM Variable Insurance Funds -- offers 2 funds for which A I M Advisors, Inc.
serves as investment adviser.
- American General Series Portfolio Company ("AGSPC") -- offers 5 funds for
which The Variable Annuity Life Insurance Company ("VALIC") serves as
investment adviser.
- OCC Accumulation Trust ("OCCAT") -- offers 1 fund for which OpCap Advisors
serves as investment adviser and PIMCO Advisors L.P. serves as investment
sub-adviser.
- Oppenheimer Variable Account Funds -- offers 4 funds for which
OppenheimerFunds, Inc. serves as investment adviser.
- Franklin Templeton Variable Insurance Products Trust -- offers 2 funds for
which Templeton Investment Counsel, Inc. and Templeton Asset Management, Ltd.
(both wholly-owned subsidiaries of Franklin Resources, Inc.), serve as
investment adviser.
- Van Kampen Life Investment Trust -- offers 1 fund for which Van Kampen Asset
Management Inc. serves as investment adviser.
Each of these Mutual Funds is registered as a diversified open-end, management
investment company and is regulated under the 1940 Act. For complete information
about each of these Funds, including charges and expenses, you should refer to
the prospectus for that Fund. Additional copies are available from the Company's
Annuity Service Center at the address shown in the back of this prospectus.
VARIABLE ACCOUNT
OPTIONS -- investment
options that correspond
to the A.G. Separate Account A
Divisions offered by
the Contract.
Investment returns on
Variable Account
Options may be positive
or negative depending on
the investment
performance of the
underlying Mutual Fund.
10
<PAGE> 14
PURCHASE PERIOD
--------------------------------------------------------------------------------
The Purchase Period begins when your first Purchase Payment is made and
continues until you begin your Payout Period. The Purchase Period can also end
when the Contract is surrendered before the Payout Period.
PURCHASE PAYMENTS
You may establish an account only through a registered representative. Initial
Purchase Payments must be received by the Company either with, or after, a
completed application. All Purchase Payments and sums payable to the Company
under the Contract must be sent to the Company's lock box at State Street Bank &
Trust Company at the following addresses: American General Annuity Insurance
Company, P.O. Box 5429, Boston, MA 02206-5429, if the Purchase Payments are sent
by mail; and State Street Bank and Trust Company, Attention Lock Box A3W, 1776
Heritage Drive, North Quincy, MA 02171, if the Purchase Payments are sent by
overnight delivery.
Minimum initial and subsequent Purchase Payments are as follows:
<TABLE>
<CAPTION>
Initial Subsequent
Purchase Purchase
Contract Type Payment Payment
--------------------------------- -------- ----------
<S> <C> <C>
Non-Qualified Contract $5,000 $1,000
Qualified Contract $2,000 $ 250
</TABLE>
Subject to the maximum and minimum Purchase Payment requirements, you may make
subsequent Purchase Payments and may increase or decrease or change the
frequency of such payments. The maximum total Purchase Payments we will accept
without our prior approval is $1,000,000.
You may select on your Contract application the Automatic Check Option. The
Automatic Check Option allows you to preauthorize debits against a bank account
that you indicate on the Preauthorized Debit Form to be sent in with your
Contract application. The minimum amount per a preauthorized debit Purchase
Payment under the Automatic Check Option is $50.
Purchase Payments are received at the Annuity Service Center. When an initial
Purchase Payment is accompanied by an application, within 2 business days we
will:
- Accept the Application -- and issue a contract.
- Reject the Application -- and return the Purchase Payment; or
- Request Additional Information -- to correct or complete the application. We
will return the Purchase Payments within 5 business days if the requested
information is not provided, unless you otherwise so specify.
In states where we are required by state law to refund an amount equal to
Purchase Payments, we invest your initial Purchase Payment and any additional
Purchase Payments in the Money Market Division from the date your investment
performance begins until the first business day 10 days later (may vary by
state). Then we will automatically allocate your investment among the investment
options you have chosen. See "Right to Return", below.
RIGHT TO RETURN
If for any reason you are not satisfied with your Contract, you may return it to
the Company and receive a refund of your Purchase Payments adjusted to reflect
investment experience. (In some states, we will return Purchase Payments as
required by state law.) To exercise your right to return your Contract, you must
mail it directly to the Annuity Service Center or return it to the registered
representative through whom you purchased the Contract within 10 days (may vary
by state) after you receive it. The address for the Annuity Service Center is
located in the back of this prospectus.
PURCHASE UNITS
A Purchase Unit is a unit of interest owned by you in your Variable Account
Option. Purchase Units apply only to the Variable Account Options selected for
your account. Purchase Unit values are calculated at the close of regular
trading of the New York Stock Exchange (the "Exchange"), currently 4:00 p.m. New
York time (see Calculation of Purchase Unit Value below for more information.)
Once we have issued your Contract and have applied your initial Purchase Payment
as described above, any subsequent Purchase Payments received at the address
above before the close of the Exchange will be credited the same business day.
If not, they will be calculated and credited the next business day. Purchase
Unit values will vary depending on the net investment results of each of the
Variable Account Options. This means the value of your Variable Account Option
will fluctuate.
CALCULATION OF PURCHASE UNIT VALUE
The Purchase Unit value for a Division is calculated as shown below:
Step 1: Calculate the gross investment rate:
Gross Investment Rate
= (EQUALS)
The Division's investment income and capital gains and losses (whether
realized or unrealized) on that day from the assets attributable to the
Division.
/ (DIVIDED BY)
The value of the Division for the immediately preceding day on which the
values are calculated.
PURCHASE PAYMENTS -- an
amount of money you pay to
the Company to receive the
benefits of an annuity
offered by the Contract.
PURCHASE UNIT -- a
measuring unit used to
calculate your Account
Value during the Purchase
Period. The value of a
Purchase Unit will vary with
the investment experience
of the Separate Account
Division you have selected.
For more information as to
how PURCHASE UNIT VALUES
are calculated, see the
Statement of Additional
Information.
11
<PAGE> 15
--------------------------------------------------------------------------------
We calculate the gross investment rate as of 4:00 p.m. New York time on each
business day when the Exchange is open.
Step 2: Calculate net investment rate for any day as follows:
Net Investment Rate
= (EQUALS)
Gross Investment Rate (calculated in Step 1)
- (MINUS)
Separate Account charges and any income tax charges.
Step 3: Determine Purchase Unit Value for that day.
Purchase Unit Value for that day.
= (EQUALS)
Purchase Unit Value for immediate preceding day.
X (MULTIPLIED BY)
Net Investment Rate (as calculated in Step 2) plus 1.00.
CHOOSING INVESTMENT OPTIONS
There are 18 investment options offered under the Contract. This includes 3
Fixed Account Options and 15 Variable Account Options. The Funds that underlie
the Variable Account Options are registered as investment companies under and
are subject to regulation of the 1940 Act. The Fixed Account Options are not
subject to regulation under the 1940 Act and are not required to be registered
under the 1933 Act. As a result, the SEC has not reviewed data in this
prospectus that relates to the Fixed Account Options. However, federal
securities law does require such data to be accurate and complete.
FIXED ACCOUNT OPTIONS
Each of the Fixed Account Options are part of the Company's general assets. You
may allocate all or a portion of your Purchase Payment to the Fixed Account
Options listed in "Summary" appearing in this prospectus. The DCA One Year Fixed
Account Option and the DCA Six Month Fixed Account Option are used exclusively
in connection with the Dollar Cost Averaging Program. See the "Dollar Cost
Averaging Program" section of this prospectus. Purchase Payments you allocate to
these Fixed Account Options are guaranteed to earn at least a minimum rate of
interest. Interest is paid on each of these Fixed Account Options at declared
rates, which may be different for each option. We bear the entire investment
risk for these Fixed Account Options. All Purchase Payments and interest earned
on such amounts in your Fixed Account Option(s) will be paid regardless of the
investment results experienced by the Company's general assets.
Here is how you may calculate the value of your Fixed Account Option(s) during
the Purchase Period:
Value of Your Fixed Account Options
= (EQUALS)
All Purchase Payments made to the Fixed Account Options
+ (PLUS)
Amounts transferred from Variable Account Options to the Fixed
Account Options
+ (PLUS)
All interest earned
- (MINUS)
Amounts transferred or withdrawn from Fixed Account Options
(including applicable fees and charges)
VARIABLE ACCOUNT OPTIONS
You may allocate all or a portion of your Purchase Payments to the Variable
Account Options listed in this prospectus. A complete discussion of each of the
Variable Account Options may be found in the "Summary" and "Variable Account
Options" sections in this prospectus. Based upon a Variable Account Option's
Purchase Unit Value your account will be credited with the applicable number of
Purchase Units. The Purchase Unit Value of each Variable Account Option will
change daily depending upon the investment performance of the underlying fund
(which may be positive or negative) and the deduction of A.G. Separate Account A
charges. See the "Fees and Charges" section in this prospectus. Because Purchase
Unit Values change daily, the number of Purchase Units your account will be
credited with for subsequent Purchase Payments will vary. Each Variable Account
Option bears its own investment risk. Therefore, the value of your account may
be worth more or less at retirement or withdrawal.
Here is how to calculate the value of each Variable Account Option in your
account during the Purchase Period:
Value of Your Variable Account Option
= (EQUALS)
Total Number of Purchase Units
X (MULTIPLIED BY)
Current Purchase Unit Value
STOPPING PURCHASE PAYMENTS
Purchase Payments may be stopped at any time. Purchase Payments may be resumed
at any time before your Contract has been surrendered. The value of the Purchase
Units will continue to vary. Your Account Value will continue to be subject to
charges.
If your Account Value falls below $500, and you do not make any Purchase
Payments for 180 days we may forward to you, at our discretion, written notice
that we will close your Account and pay the Account Value 90 days from the date
of notice if additional Purchase Payments are not made in amounts sufficient to
increase your Account Value to $500 or more.
12
<PAGE> 16
TRANSFERS BETWEEN INVESTMENT OPTIONS
--------------------------------------------------------------------------------
You may transfer all or part of your Account Value between the various Fixed
Account and Variable Account Options in the Contract subject to the limitations
on transfers discussed below. Transfer instructions may be made either in
writing or by telephone as discussed below. Transfers may be made during the
Purchase Period or during the Payout Period.
DURING THE PURCHASE PERIOD
During the Purchase Period, transfers may be made among the Contract's Variable
Account Options and between the Variable Account Options and the One Year Fixed
Account Option free of charge. We reserve the right to impose a fee of the
lesser of $25 or 2% of the amount transferred for each transfer (which will be
deducted from the amount transferred).
We currently permit transfers among the Variable Account Options and between the
Variable Account Options and the One Year Fixed Account Option once per day.
However, if you make a transfer from the One Year Fixed Account Option into one
or more Variable Account Options you will be required to wait six months before
you will be allowed to make a transfer from one or more Variable Account Options
back into the One Year Fixed Account Option. In addition, we may limit the
number of transfers you can make. The minimum amount to be transferred in any
one transfer is $250 or the entire amount in the Variable Account Option or One
Year Fixed Account Option from which the transfer is made. If a transfer request
would reduce your Account Value in a Variable Account Option or the One Year
Fixed Account Option below $500, we will transfer your entire Account Value in
that Variable Account Option or the One Year Fixed Account Option.
Transfers from the One Year Fixed Account Option to a Variable Account Option
are limited to 20%, per Contract Year, of the Account Value of the One Year
Fixed Account Option. This 20% per Contract Year limit is determined as of the
immediately preceding Contract Anniversary.
We currently do not permit transfers from the Variable Account Options to the
DCA Fixed Account Options. Transfers from the DCA Fixed Account Options may only
be made under the Dollar Cost Averaging Program. See the "Dollar Cost Averaging
Program" -- section of this prospectus.
DURING THE PAYOUT PERIOD
During the Payout Period, transfers may be made between the Variable Account
Options and from the Variable Account Options to the One Year Fixed Account
Option. We will not permit transfers from any Fixed Account Option during the
Payout Period. We reserve the right to impose a fee of the lesser of $25 or 2%
of the amount transferred for each transfer (which will be deducted from the
amount transferred). The minimum amount to be transferred during the Payout
Period is $250.
Transfers during the Payout Period are permitted subject to the following
limitations:
<TABLE>
<CAPTION>
% OF ACCOUNT OTHER
ACCOUNT OPTION VALUE FREQUENCY RESTRICTIONS(2)
-------------- ------------ -------------------- --------------------
<S> <C> <C> <C>
Variable: Up to 100% Unlimited among The minimum amount
Variable Account to be transferred is
Options(1). Once per $250 or the entire
year if the transfer amount in the
is made to the One Variable Account
Year Fixed Account Option if less. The
Option. minimum amount which
must remain in the
Variable Account
Option after a
transfer is $500 or
$0 if the entire
amount of the
Variable Account
Option is
transferred.
Fixed: Not -- --
permitted
</TABLE>
---------------
(1) The Company may change the number of transfers permitted to no more than six
(6) transfers per year during the Payout Period.
(2) Currently, no transfer fee is imposed on transfers. The Company reserves the
right to impose such a fee in the future which will not exceed the lesser of
$25 or 2% of the amount transferred.
COMMUNICATING TRANSFER OR
REALLOCATION INSTRUCTIONS
A written instruction to transfer or reallocate all or part of your Account
Value between the various investment options in the Contract should be sent to
our Annuity Service Center.
Instructions for transfers or reallocations may be made by calling
1-800-424-4990. Telephone transfers will be allowed unless we have been notified
not to accept such telephone instructions. In this event, we must receive
written instructions, in order to permit future telephone transfers to be made.
Before a transfer will be made by telephone, you must give us the requested
identifying information concerning your account(s).
Unless we have been instructed not to accept requests for telephone transfers,
anyone may effect a telephone transfer if they furnish the requested
information. You will bear any loss resulting from such instructions, whether
the caller was specifically authorized by you or not.
ACCOUNT VALUE -- the total
sum of your Fixed Account
and/or Variable Account
Options that have not yet
been applied to your Payout
Payments.
PURCHASE PERIOD -- the time
between your first Purchase
Payment and your Payout
Period (or surrender).
ANNUITY SERVICE CENTER -- our
Annuity Service Center is
located at 205 E. 10th
Avenue, Amarillo, Texas 79101
CONTRACT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract.
CONTRACT ANNIVERSARY -- the date
that the contract is issued
and each yearly anniversary
of that date thereafter.
PAYOUT PERIOD -- the time
that starts when you begin to
withdraw your money in a
steady stream of payments.
13
<PAGE> 17
--------------------------------------------------------------------------------
No one that we employ or that represents the Company may give telephone
instructions on your behalf without the Company's prior written permission.
(This does not apply to a contract with the immediate family of an employee or
representative of the Company).
We will send you a confirmation of the completed transfer within 5 days from the
date of your instruction. When you receive your confirmation, it is your duty to
verify the information shown, and advise us of any errors within one business
day.
You will bear the risk of loss arising from instructions received by telephone.
We are not responsible for the authenticity of such instructions. Any telephone
instructions which we reasonably believe to be genuine will be your
responsibility. This includes losses from errors in communication. Telephone
transfer instruction may not be made during the Payout Period. We reserve the
right to stop telephone transfers at any time.
SWEEP ACCOUNT PROGRAM
During the Purchase Period you may elect to participate in the Sweep Account
Program if your Account Value in the One Year Fixed Account Option is at least
$25,000 on the date that the request for the Sweep Account Program is received
by us at the Annuity Service Center. The Sweep Account Program allows you to
transfer the earnings from the One Year Fixed Account Option to the Variable
Account Options. The transfers can be made on a quarterly, monthly, semi-annual
or annual basis. All amounts transferred must be in whole percentages, with a
10% minimum to be transferred to each selected Variable Account Option(s). There
is no charge for the Sweep Account Program. We do not take into account
transfers made pursuant to the Sweep Account Program in assessing any transfer
fee.
EFFECTIVE DATE OF TRANSFER
The effective date of a transfer will be:
- The date of receipt, if received at our Annuity Service Center before the
close of regular trading of the Exchange on a day values are calculated;
(Normally, this will be 4:00 P.M. New York time); otherwise
- The next date values are calculated.
RESERVATION OF RIGHTS AND MARKET TIMING
If a transfer causes your Account Value in the One Year Fixed Account Option or
a Variable Account Option to fall below $500, we may transfer the remaining
Account Value in the same proportions as your transfer request.
We may defer any transfer from the One Year Fixed Account Option to the Variable
Account Options for up to six months.
The Contracts are not designed for professional market timing organizations or
other entities using programmed and frequent transfers. We reserve the right at
any time and without prior notice to any party to terminate, suspend, or modify
our policies or procedures regarding transfer requests.
DOLLAR COST AVERAGING PROGRAM
You may elect the Dollar Cost Averaging Program which permits the systematic
transfer of your Account Value from a Fixed Account Option or the Money Market
Division to one or more Variable Account Options not including the Money Market
Division. By allocating amounts on a regularly scheduled basis, as opposed to
allocating the total amount at one particular time, you may be less susceptible
to the effect of market fluctuations. We currently provide three Fixed Account
Options, two of which, the DCA One Year Fixed Account and the DCA Six Month
Fixed Account, are available only for dollar cost averaging.
We determine the amount of transfers from a DCA Fixed Account Option or the
Money Market Division by dividing the Purchase Payments allocated to that DCA
Fixed Account Option or the Money Market Division by a factor based on the
number of months remaining in the term. Transfers from a DCA Fixed Account
Option or the Money Market Division are only available on a monthly basis. We
require that you specify each allocation to a Variable Account Option, not
including the Money Market Division, in whole percentages using a maximum of 10
Variable Account options. The minimum amount to be transferred into a Variable
Account Option is 10% of the entire amount transferred.
We will transfer your entire Account Value in a DCA Fixed Account Option by the
expiration of its term. The minimum amount to be transferred under the Dollar
Cost Averaging Program is $250 per transfer. We currently do not permit
transfers to either DCA Fixed Account from the Variable Account Options or the
One Year Fixed Account Option.
You may enroll in dollar cost averaging for the DCA Fixed Account Options only
when you make initial or subsequent Purchase Payments. However, you may enroll
in dollar cost averaging for the Money Market Division at any time. If you
choose the Money Market Division for dollar cost averaging it must be for at
least a 12 month
14
<PAGE> 18
--------------------------------------------------------------------------------
period. There is no charge for dollar cost averaging. We do not take into
account transfers made pursuant to the Dollar Cost Averaging Program in
assessing any transfer fee.
The chart below explains the different Account Options you may choose if you
elect to participate in the Dollar Cost Averaging Program offered by the
Contract:
<TABLE>
<CAPTION>
FREQUENCY OTHER
ACCOUNT OPTION OF TRANSFERS RESTRICTIONS
--------------------- ------------------ ------------------
<S> <C> <C>
- DCA One Year Fixed Monthly, for a 12 You may only
Account Option month period participate at the
time that Purchase
Payments are
made.(1)
- DCA Six Month Fixed Monthly, for a 6 You may only
Account Option month period participate at the
time that Purchase
Payments are
made.(1)
- Money Market Monthly You must remain in
Division this account
option for the
Dollar Cost
Averaging Program
for at least a 12
month period.
</TABLE>
---------------
(1) You will not be permitted to transfer Account Value into a DCA Fixed Account
Option once the entire Account Value has been transferred out of a DCA Fixed
Account Option.
PORTFOLIO REBALANCING PROGRAM
From time to time, we will make available a portfolio rebalancing program which
provides for periodic pre-authorized automatic transfers among the Variable
Account Options pursuant to your written allocation instructions. We will make
such transfers to maintain a specified percentage allocation of Account Value
among the Variable Account Options as selected by you. We require each
allocation to a Variable Account Option equal at least 1% of Account Value.
You may elect the portfolio rebalancing program on the date that the request for
portfolio rebalancing is received by us at the Annuity Service Center. You may
select rebalancing to occur on a monthly, quarterly, semi-annual, or annual
basis, and currently, all Variable Account Options are available for portfolio
rebalancing. The Fixed Account Options do not participate in portfolio
rebalancing.
There is no charge for portfolio rebalancing. We do not take into account
transfers made pursuant to the Portfolio Rebalancing Program in assessing any
transfer fee.
15
<PAGE> 19
FEES AND CHARGES
--------------------------------------------------------------------------------
By investing in the Contract, you may be subject to six basic types of fees and
charges:
- Account Maintenance Fee
- Surrender Charge
- Premium Tax Charge
- Separate Account Charges
- Fund Annual Expense Charges
- Other Tax Charges
These fees and charges are explained below. For additional information about
these fees and charges, see the Fee Table in this prospectus.
ACCOUNT MAINTENANCE FEE
An account maintenance fee of $30 will be deducted on each Contract Anniversary
from your Account Value during the Purchase Period. If all your money in the
Contract is withdrawn, the fee will be deducted at that time. The fee will be
assessed equally among the Variable Account and Fixed Account Options that make
up your Account Value.
The account maintenance fee is to reimburse the Company for our administrative
expenses for providing Variable Account and Fixed Account Options. This includes
the expense for establishing and maintaining the recordkeeping for your
Contract.
During the Purchase Period, if your Account Value on a Contract Anniversary is
at least $25,000, we will waive the account maintenance fee for the next
Contract Year.
SURRENDER CHARGE
When you withdraw money from your account, you may be subject to a surrender
charge that will be deducted from the amount withdrawn. For information about
your right to surrender, see "Surrender of Account Value" in this prospectus.
It is assumed that the Purchase Payments are withdrawn first under the concept
of first-in, first-out. No surrender charge will be applied unless an amount is
actually withdrawn.
We calculate the surrender charge by multiplying the applicable percentages
specified in the table below by the Purchase Payments withdrawn.
Amount of Surrender Charge
A surrender charge may not be greater than:
<TABLE>
<CAPTION>
NUMBER OF YEARS
SINCE
DATE OF PURCHASE CHARGE AS PERCENTAGE OF
PAYMENT PURCHASE PAYMENT WITHDRAWN
---------------- --------------------------
<S> <C>
1 7%
2 7%
3 5%
4 5%
5 4%
6 2%
7+ 0%
</TABLE>
10% Free Withdrawal
For each Contract Year after the first Contract Year, up to 10% of the Account
Value, determined as of the immediately preceding Contract Anniversary (or if
during the first Contract Year, the date the Contract is issued), may be
withdrawn once each Contract Year without a surrender charge. The surrender
charge will apply to any amount withdrawn that exceeds this 10% limit. The
percentage withdrawn will be determined by dividing the amount withdrawn by the
Account Value, determined as of the immediately preceding Contract Anniversary.
If a surrender charge is applied to all or part of a Purchase Payment, no
surrender charge will be applied to such Purchase Payment (or portion thereof)
again.
The 10% free withdrawal requires a minimum withdrawal of $100, or if less, the
entire Account Value. The minimum amount which must remain in each Division in
which you are invested, after a withdrawal, is $500.
EXCEPTIONS TO SURRENDER CHARGE
No surrender charge will be applied:
- To death benefits;
- To Payout Payments; and
- To partial surrenders through the Systematic Withdrawal Program, in lieu of
the 10% free withdrawal, during the first Contract Year, see the "Surrender of
Account Value" section of this prospectus.
CONTRACT ANNIVERSARY -- the
date that the contract
is issued and each
yearly anniversary
of that date thereafter.
CONTRACT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract.
16
<PAGE> 20
--------------------------------------------------------------------------------
PREMIUM TAX CHARGE
Taxes on Purchase Payments are imposed by some states, cities, and towns.
Currently, rates range from zero to 3.5%.
The timing of tax levies varies from one taxing authority to another. If premium
taxes are applicable to a Contract, we will deduct such tax against Account
Value in a manner determined by us in compliance with applicable state law. We
may deduct an amount for premium taxes either upon:
- receipt of the Purchase Payments;
- the commencement of Payout Payments;
- surrender (full or partial); or
- the payment of death benefit proceeds.
SEPARATE ACCOUNT CHARGES
There will be a mortality and expense risk fee and an administration fee applied
to A.G. Separate Account A. These are daily charges at annualized rates of 0.70%
and 0.15%, respectively, on the average daily net asset value of A.G. Separate
Account A. Each charge is guaranteed and cannot be increased by the Company. The
mortality and expense risk fee is to compensate the Company for assuming
mortality and expense risks under the Contract. The mortality risk that the
Company assumes is the obligation to provide payments during the Payout Period
for your life no matter how long that might be. In addition, the Company assumes
the obligation to pay, during the Purchase Period, a death benefit. For more
information about the death benefit see the "Death Benefit" section of this
prospectus. The expense risk is our obligation to cover the cost of issuing and
administering the Contract, no matter how large the cost may be.
The Company may make a profit on the mortality and expense risk fee and on the
administration fee.
The administration fee is to reimburse the Company for our administrative
expenses under the Contract. This includes the expense of administration and
marketing (including but not limited to enrollment and Contract Owner
education).
For more information about the mortality and expense risk fee and administration
fee, see the Fee Table in this prospectus.
FUND ANNUAL EXPENSE CHARGES
Investment management charges based on a percentage of each Fund's average daily
net assets are payable by each Fund. Depending on the Variable Account Option
selected, the charges will be paid by each Fund to its investment adviser. These
charges and other Fund charges and expenses are fully described in the
prospectuses for the Funds. These charges indirectly cost you because they lower
your return.
OTHER TAX CHARGES
We reserve the right to charge for certain taxes (other than premium taxes) that
we may have to pay. This could include federal income taxes. Currently, no such
charges are being made.
17
<PAGE> 21
PAYOUT PERIOD
--------------------------------------------------------------------------------
The Payout Period begins when you decide to withdraw your money in a steady
stream of payments. You select the date to begin the Payout Period, the Payout
Date. You may apply any portion of your Account Value to one of the types of
Payout Options listed below. You may choose to have your Payout Option on either
a fixed, a variable, or a combination payout basis. When you choose to have your
Payout Option on a variable basis, you may keep the same Variable Account
Options in which your Purchase Payments were made, or transfer to different
ones.
FIXED PAYOUT
Under Fixed Payout, you will receive payments from the Company. These payments
are fixed and guaranteed by the Company. The amount of these payments will
depend on:
- Type and duration of Payout Option chosen;
- Your age or your age and the age of your survivor(1);
- Your sex or your sex and the sex of your survivor(1)(2);
- The portion of your Account Value being applied; and
- The payout rate being applied and the frequency of the payments.
(1) This applies only to joint and survivor payouts.
(2) Not applicable for certain Contracts.
VARIABLE PAYOUT
With a Variable Payout, you may select from your existing Variable Account
Options. Your payments will vary accordingly. This is due to the varying
investment results that will be experienced by each of the Variable Account
Options you selected. The Payout Unit Value is calculated just like the Purchase
Unit Value for each Variable Account Option except that the Payout Unit Value
includes a factor for the Assumed Investment Rate. For additional information on
how Payout Payments and Payout Unit Values are calculated, see the Statement of
Additional Information.
In determining your first Payout Payment, an Assumed Investment Rate of 3% is
used. If the net investment experience of the Variable Account Option exceeds
the Assumed Investment Rate, your next payment will be greater than your first
payment. If the investment experience of the Variable Account Option is lower
than your Assumed Investment Rate, your next payment will be less than your
first payment.
COMBINATION FIXED AND VARIABLE
PAYOUT
With a Combination Fixed and Variable Payout, you can divide your Account Value
between:
- Variable Payout, from your existing Variable Account Options (payments will
vary); and
- Fixed Payout (payment is fixed and guaranteed).
PAYOUT DATE
The Payout Date is the date elected by you on which your payout payments will
start and is subject to our approval. The Payout Date must be at least four
years after the date that the Contract is issued. You may change the Payout Date
subject to our approval. We will notify you of the approaching Payout Date 60 to
90 days prior to such date. Unless you select a Payout Date, we will
automatically extend the Payout Date to begin at the later of when you attain
age 85 or ten years after we issue the Contract. Generally, for qualified
contracts, the Payout Date may begin when you attain age 59 1/2 or separate from
service, but must begin no later than April 1 following the calendar year you
reach age 70 1/2 or the calendar year in which you retire. However, the date may
be later for participants in 403(b) plans. Non-qualified annuities do not have a
specific date. For additional information on the minimum distribution rules that
apply to payments under IRA or 403(b) plans, see "Federal Tax Matters" in this
prospectus and in the Statement of Additional Information.
PAYOUT OPTIONS
You may specify the manner in which your Payout Payments are made. You may
select one of the following options:
- LIFE ONLY -- payments are made only to you during your lifetime. Under this
option there is no provision for a death benefit for the beneficiary. For
example, it would be possible under this option for the Annuitant to receive
only one payout payment if he died prior to the date of the second payment,
two if he died before the third payment.
- LIFE WITH PERIOD CERTAIN -- payments are made to you during your lifetime;
but if you die before the guaranteed period has expired, your beneficiary
will receive payments for the rest of your guaranteed period.
PAYOUT UNIT -- a measuring
unit used to calculate Payout
Payments from your Variable
Account Option. Payout Unit
values will vary with the
investment experience of the
A.G. Separate Account A
Division you have selected.
ASSUMED INVESTMENT
RATE -- the rate used to
determine your first monthly
Payout Payment per
thousand dollars of Account
Value in your Variable
Account Option(s).
18
<PAGE> 22
--------------------------------------------------------------------------------
- JOINT AND SURVIVOR LIFE -- payments are made to you during the joint
lifetime of you and your joint annuitant. Upon the death of either you or
your joint annuitant, payments continue during the lifetime of the
survivor. This option is designed primarily for couples who require payouts
during their joint lives and are not concerned with providing for
beneficiaries at death of the last survivor. For example, it would be
possible under this option for the Joint Annuitants to receive only one
payment if both Annuitants died prior to the date of the second payment.
Additionally, it would be possible for the Joint Annuitants to receive only
one payment and the surviving Annuitant to receive only one payment if one
Annuitant died prior to the date of the second payment and the surviving
Annuitant dies prior to the date of the third payment.
PAYOUT INFORMATION
Once your Payout Payments have begun, the option you have chosen may not be
changed. Any one of the Variable Account Options may result in your receiving
unequal payments during your life expectancy. If payments begin before age
59 1/2, you may suffer unfavorable tax consequences if you do not meet an
exception to federal tax law. See "Federal Tax Matters" in this prospectus.
Your Payment Option should be selected at least 15 days before your Payout Date.
If such selection is not made and state or federal law does not require the
selection of the Joint and Survivor Life Option:
- Payments will be made under the Life with Period Certain Option,
- The payments will be guaranteed for a 10 year period,
- The payments will be based on the allocation used for your Account Value,
- The non-DCA Fixed Account Option will be used to distribute payments to you
on a Fixed Payout basis, and
- Variable Account Options will be used to distribute payments to you on a
Variable Payout basis.
Most Payout Payments are made monthly; however, Payout Payments may also be made
as quarterly, semiannual or annual installments. If you have chosen either a
Fixed or Variable Payout Option and if the amount of your payment is less than
$200, we reserve the right to reduce the number of payments made each year so
each of your payments is at least $200. If you have chosen a combination of
Fixed and Variable Payout Options and the amount of your payment is less than
$100, we reserve the right to reduce the number of payments made each year so
each of your payments is at least $100.
For more information about
PAYOUT OPTIONS
available under the Contract,
see the Statement of
Additional Information.
19
<PAGE> 23
SURRENDER OF ACCOUNT VALUE
--------------------------------------------------------------------------------
WHEN SURRENDERS ARE ALLOWED
You may withdraw all or part of your Account Value at any time before the Payout
Period begins if:
- allowed under federal and state law; and/or
- allowed under your retirement plan.
For an explanation of charges that may apply if you surrender your Account
Value, see "Fees and Charges" in this prospectus.
You may be subject to a 10% federal tax penalty for partial or total surrenders
made before age 59 1/2, see "Federal Tax Matters" in this prospectus.
AMOUNT THAT MAY BE SURRENDERED
The amount that may be surrendered at any time can be determined as follows:
<TABLE>
<S> <C> <C>
Your
Account
Allowed Value(1)
Surrender - (MINUS)
Value Any Applicable
= (EQUALS) Surrender
Charge, any
applicable taxes
and Account
Maintenance Fee
</TABLE>
(1) Equals the Account Value next computed after your properly completed
request for surrender is received at the Annuity Service Center.
There is no guarantee that the Surrender Value in a Variable Account Option will
ever equal or exceed the total amount of your Purchase Payments received by us.
We will mail to you the Surrender Value within 7 calendar days after we receive
your properly completed surrender request at the Annuity Service Center.
However, we may be required to suspend or postpone payments if redemption of an
underlying Fund's shares have been suspended or postponed. See your current
Fund(s)' prospectuses for a discussion of the reasons why the redemption of
shares may be suspended or postponed.
We may receive a surrender for a Purchase Payment which has not cleared the
banking system. We may delay payment of that portion of your Surrender Value
until the check clears. The rest of the Surrender Value will be processed as
usual.
SURRENDER RESTRICTIONS
Generally, Internal Revenue Code Section 403(b)(11) permits total or partial
distributions from a 403(b) contract only on account of hardship (employee
contributions only without accrued interest), attainment of age 59 1/2,
separation from service, death or disability.
Under the TEXAS STATE OPTIONAL RETIREMENT PROGRAM, no surrender or partial
surrender will be allowed except for attainment of age 70 1/2, retirement or
other termination of employment or death.
PARTIAL SURRENDER
You may request a partial surrender of your Account Value at any time during the
Purchase Period. A partial surrender plus any surrender charge will reduce your
Account Value.
To process your partial surrender, you may specify the Account Value that should
be deducted from each investment option. If you fail to provide us with this
information, we may deduct the partial surrender from each investment option in
which your Account Value is held on a pro rata basis.
The minimum partial surrender we will allow is $500 or your entire Account
Value, if less.
We reserve the right to defer the payment of a partial surrender from the One
Year Fixed Account Option for up to six months. We currently do not permit
partial surrenders from the DCA Fixed Account Options.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to make withdrawals in a Contract
Year of up to 10% of your Account Value without the imposition of a surrender
charge. If you withdraw more than 10% of your Account Value, you will be subject
to a surrender charge. Account Value, for purposes of the Systematic Withdrawal
Program, is determined as of the immediately preceding Contract Anniversary or,
if during the first Contract Year, the date we issue you the Contract. See the
"Fees and Charges" section in this prospectus.
You may elect to withdraw all or part of your Account Value under a systematic
withdrawal method described in your Contract. Withdrawals using this method are
eligible for the 10% free withdrawal privilege each Contract Year. The
Systematic Withdrawal Program provides for:
- Payments to be made to you;
- Payment over a stated period of time;
- Payment of a stated yearly dollar amount or percentage.
We may require a minimum withdrawal of $100 per withdrawal under this method.
The portion of your account that has not been withdrawn will continue to receive
the investment return of the Variable Account Option or the
20
<PAGE> 24
--------------------------------------------------------------------------------
Fixed Account Option that you selected. A systematic withdrawal election may be
changed or revoked at no charge. No more than one systematic withdrawal election
may be in effect at any one time. We reserve the right to discontinue any or all
systematic withdrawals or to change its terms, at any time.
DISTRIBUTIONS REQUIRED BY FEDERAL TAX LAW.
See "Federal Tax Matters" in this prospectus and in the Statement of Additional
Information for more information about required distributions imposed by tax
law.
For an explanation of possible adverse tax consequences of a surrender, see
"Federal Tax Matters" in this prospectus and in the Statement of Additional
Information.
21
<PAGE> 25
EXCHANGE PRIVILEGE
--------------------------------------------------------------------------------
We issue other fixed and/or variable annuity contracts (other contracts) in
addition to ElitePlus Value. We will allow you, under certain conditions, to
exchange from one of these other contracts to ElitePlus Value. If you elect to
exercise an exchange, you should contact our Annuity Service Center at the
address shown in the back of this prospectus. An exchange may require the
issuance of a contract or may be subject to any other requirements that the
Company may impose. Below are certain provisions regarding an exchange into
ElitePlus Value. Please carefully read this entire prospectus for a more
detailed description of ElitePlus Value.
RESTRICTIONS ON EXCHANGE PRIVILEGE
We will impose certain general restrictions and rules on the exchange
privileges.
You will be subject to the rules concerning transfers among investment options
as stated in the "Transfers Between Investment Options" section in this
prospectus. We may, at our option, waive any transfer restrictions for a stated
period of time. If we waive these transfer restrictions, you will be allowed to
exchange to any investment option available in ElitePlus Value. Please read the
"Transfers Between Account Options" section in this prospectus.
WE RESERVE THE RIGHT TO
TERMINATE, MODIFY OR SUSPEND
THESE EXCHANGE PRIVILEGES AT ANY TIME.
CHARGES AND TAXES
While we impose no fee for an exchange, you will be subject to all of the fees
and charges stated in this prospectus. These fees and charges may include a
surrender charge, mortality and expense risk fee, administrative fee, account
maintenance fee and certain other fees and charges. These charges will be
incurred even though you may not have them on the contract you were in before
your exchange into ElitePlus Value. Please read the "Fees and Charges" section
of this prospectus.
Please read the "Federal Tax Matters" section in this prospectus for information
about the federal income tax treatment of ElitePlus Value.
22
<PAGE> 26
DEATH BENEFITS
--------------------------------------------------------------------------------
The Contract will pay a death benefit during either the Purchase Period or the
Payout Period. How the death benefit will be paid is discussed below. The death
benefit provisions in the Contract may vary from state to state.
BENEFICIARY INFORMATION
The Beneficiary may receive death benefits:
- In a lump sum; or
- Payment of the entire death benefit within 5 years of the date of death; or
- In the form of an annuity under any of the Payout Options stated in the Payout
Period section of this prospectus subject to the restrictions of that Payout
Option.
Payment of any death benefits must be within the time limits set by federal tax
law.
SPECIAL INFORMATION FOR NON-TAX QUALIFIED CONTRACTS
It is possible that the Contract Owner and the Annuitant under a Non-Qualified
Contract are not the same person. If this is the case, and the Contract Owner
dies, death benefits must be paid:
- within 5 years of the date of death; or
- beginning within 1 year of the date of death under:
- a life annuity with or without a period certain, or
- an annuity for a designated period not extending beyond the life expectancy
of the Beneficiary.
JOINT OWNER SPOUSAL ELECTION INFORMATION
The Beneficiary will receive the Death Benefit payout if:
- the Contract Owner dies before the Payout Date, or
- the Annuitant dies during the Annuity Period.
If the Annuitant dies before the Annuity date, the Owner may designate a new
Annuitant or become the Annuitant.
With regard to Joint Owners of a Non-Qualified Contract, the Death Benefit is
payable upon the death of either Owner during the Purchase Period. However, in
the event of your death where the sole Beneficiary of the Non-Qualified Contract
is your spouse, your spouse may continue the Contract as Owner, in lieu of
receiving the Death Benefit.
DURING THE PURCHASE PERIOD
If death occurs before your 80th birthday, then the Death Benefit during the
Purchase Period will be the greater of:
<TABLE>
<S> <C> <C>
Your Account Value on the date both proof of
death and election of the payment method are
received by the Company at its Annuity Service
Center
OR
100% of Purchase Payments (to Fixed and/or
Variable Account Options)
- (MINUS)
Amount of all prior withdrawals, charges and any
portion of Account Value applied under a Payout
Option
</TABLE>
If death occurs at the age of 80 or older, then the Death Benefit during the
Purchase Period will be:
<TABLE>
<S> <C> <C>
Your Account Value on the date both proof of
death and election of the payment method are
received by the Company at its Annuity Service
Center.
</TABLE>
DURING THE PAYOUT PERIOD
If the Annuitant dies during the Payout Period, your Beneficiary may receive any
continuing payments under the Payout Option that you selected. The Payout
Options available in the Contract are described in the "Payout Period" section
of this prospectus.
BENEFICIARY -- the person
designated to receive Payout
Payments or the Account Value
upon the death of
an Annuitant or the Owner.
ANNUITANT -- the individual,
(in most cases this person is
you) to whom Payout
Payments will be paid. The
Annuitant is also the
measuring life for the Contract.
FIXED ACCOUNT OPTIONS -- a
particular subaccount into
which your Purchase
Payments and Account Value
may be allocated to fixed
investment options. Currently,
there are three Fixed
Account Options: the One Year
Fixed Account Option; the DCA
Six Month Fixed Account
Option; and the DCA One Year
Fixed Account Option. The
One Year Fixed Account Option
is guaranteed to earn at least a
minimum rate of interest.
VARIABLE ACCOUNT
OPTIONS -- Investment
Options that correspond to
A.G. Separate Account A
Divisions offered by the
Contract. Investment returns
on Variable Account Options
will be positive or negative
depending on the investment
performance of the
underlying mutual fund.
CONTRACT ANNIVERSARY -- the
date that the contract
is issued and each
yearly anniversary
of that date thereafter.
23
<PAGE> 27
HOW TO REVIEW INVESTMENT PERFORMANCE
OF SEPARATE ACCOUNT DIVISIONS
--------------------------------------------------------------------------------
We will advertise information about the investment performance of the A.G.
Separate Account A Divisions. Our advertising of the past investment performance
results does not mean that future performance will be the same. The performance
information will not predict what your actual investment experience will be in
that Division or show past performance under an actual contract. We may also
show how the Divisions rank on the basis of data compiled by independent ranking
services.
Some of the Divisions (and underlying Funds) offered in this prospectus were
previously or currently are available through other annuity or life insurance
contracts. We may therefore, advertise investment performance since the
inception of the underlying Funds. In each case, we will use the charges and
fees imposed by the Contract in calculating the Division's investment
performance.
TYPES OF INVESTMENT PERFORMANCE
INFORMATION ADVERTISED
We may advertise the Divisions' Total Return Performance information and Yield
Performance information.
TOTAL RETURN PERFORMANCE INFORMATION
Total Return Performance Information is based on the overall dollar or
percentage change in value of an assumed investment in a Division over a given
period of time.
There are seven ways Total Return Performance Information may be advertised:
- Standard Average Annual Total Return
- Nonstandard Average Annual Total Return
- Cumulative Total Return
- Annual Change in Purchase Unit Value
- Cumulative Change in Purchase Unit Value
- Total Return Based on Different Investment Amounts
- An Assumed Account Value of $10,000
Each of these is described below.
STANDARD AVERAGE ANNUAL TOTAL RETURN
Standard Average Annual Total Return shows the average percentage change in the
value of an investment in the Division from the beginning to the end of a given
historical period. The results shown are after all charges and fees have been
applied against the Division. This will include account maintenance fees and
surrender charges that would have been deducted if you surrendered the Contract
at the end of each period shown. Premium taxes are not deducted. This
information is calculated for each Division based on how an initial assumed
payment of $1,000 performed at the end of 1, 5 and 10 year periods. If Standard
Average Annual Total Return for a Division is not available for a stated period,
we may show the Standard Average Annual Total Return since Division inception.
The return for periods of more than one year are annualized to obtain the
average annual percentage increase (or decrease) during the period.
Annualization assumes that the application of a single rate of return each year
during the period will produce the ending value, taking into account the effect
of compounding.
NONSTANDARD AVERAGE ANNUAL TOTAL RETURN
Nonstandard Average Annual Total Return is calculated in the same manner as the
Standard Average Annual Total Return. However, Nonstandard Average Annual Total
Return shows only the historic investment results of the Division. Account
maintenance fees, surrender charges and premium taxes are not deducted. The SEC
staff takes the position that performance information of an underlying Fund
reduced by Account fees for a period prior to the inception of the corresponding
Division is nonstandard performance information regardless of whether all
Account fees and charges are deducted. For Divisions 1-7, which recently
commenced operations, only Nonstandard Average Annual Total Returns are shown.
Accordingly the Standard Average Annual Total Return for each of these Divisions
will be shown when it becomes available.
CUMULATIVE TOTAL RETURN
Cumulative Total Return assumes the investment in the Contract will stay in the
Division beyond the time that a surrender charge would apply. It may be
calculated for 1, 5 and 10 year periods. If Cumulative Total Return for a
Division is not available for a stated period, we may show the Cumulative Total
Return since Division inception. It is based on an assumed initial investment of
$10,000. The Cumulative Return will be calculated without deduction of account
maintenance fees, surrender charges or premium taxes.
DIVISIONS -- subaccounts of
A.G. Separate Account A
which represent the Variable
Account Options in the
Contract. Each Division
invests in a different mutual
fund, each having its own
investment objective and
strategy.
PURCHASE PAYMENTS -- an
amount of money you pay to
the Company to receive the benefits
of an annuity Contract offered
by the Contract.
For more information on how
TOTAL RETURN PERFORMANCE
INFORMATION is calculated,
see the Statement of
Additional Information.
24
<PAGE> 28
--------------------------------------------------------------------------------
ANNUAL CHANGE IN PURCHASE UNIT VALUE
Annual Change in Purchase Unit Value is a percentage change during a one year
period. This is calculated as follows:
- The Purchase Unit Value at the start of the year is subtracted from the
Purchase Unit Value at the end of the year;
- The difference is divided by the Purchase Unit Value at the start of the
year.
Account maintenance fees, surrender charges and premium taxes are not deducted.
The effect of these charges, if deducted, would reduce the Division's Annual
Change in Purchase Unit Value.
CUMULATIVE CHANGE IN PURCHASE UNIT VALUE
Cumulative Change in Purchase Unit Value is a percentage change from the
beginning to the ending of a period usually greater than one year. Otherwise, it
is calculated in the same way as the Annual Change in Purchase Unit Value.
TOTAL RETURN BASED ON DIFFERENT
INVESTMENT AMOUNTS
We may show total return information based on different investment amounts. For
example, we may show $200 a month for 10 years, or $100 a month to age 65. Fees
may or may not be included. Each performance illustration will explain the
Contract charges and fees imposed on the Division.
AN ASSUMED ACCOUNT VALUE OF $10,000
We may show annual values based on an initial investment of $10,000. This will
not reflect any deduction for account maintenance fees, surrender charges and
premium taxes.
YIELD PERFORMANCE INFORMATION
We may advertise Yield Performance, at a given point in time. A Division's yield
is one way of showing the rate of income the Division is earning as a percentage
of the Division's Purchase Unit Value.
AGSPC MONEY MARKET DIVISION
We may advertise the AGSPC Money Market Division's Current Yield and Effective
Yield.
The Current Yield refers to the income produced by an investment in the AGSPC
Money Market Division over a given 7-day period. The Current Yield does not take
into account surrender charges or premium taxes. The income produced over a 7
day period is then "annualized." This means we are assuming the amount of income
produced during the 7-day period will continue to be produced each week for an
entire year. The annualized amount is shown as a percentage of the investment.
The Effective Yield is calculated in a manner similar to the Current Yield. But,
when the yield is annualized the income earned is assumed to be reinvested. The
compounding effect will cause the Effective Yield to be higher than the Current
Yield.
DIVISIONS OTHER THAN MONEY MARKET FUND DIVISIONS
We may advertise the standardized yield performance for each Division. The yield
for each Division will be determined as follows:
- We will subtract the account maintenance fee from the average daily net
investment income per Purchase Unit;
- We will divide the remainder by the Purchase Unit Value on the last day of
the period; and
- We will annualize the result.
PERFORMANCE INFORMATION:
AVERAGE ANNUAL TOTAL RETURN AND CUMULATIVE RETURN TABLES.
In the sections above we have described a number of ways we may advertise
information about the investment performance of A.G. Separate Account A
Divisions. Certain performance information for each A.G. Separate Account A
Division is printed in the three tables below.
The information presented does not reflect the advantage under the Contract of
deferring federal income tax on increases in Account Value due to earnings
attributable to Purchase Payments (see "Federal Tax Matters" in this prospectus
and in the Statement of Additional Information.) The information presented also
does not reflect the advantage under Qualified Contracts of deferring federal
income tax on Purchase Payments.
The performance results shown in the following tables are not an estimate or
guarantee of future investment performance, and do not represent the actual
experience of amounts invested by a particular Contract owner.
25
<PAGE> 29
TABLE I
AVERAGE ANNUAL TOTAL RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH SURRENDER CHARGE AND MAINTENANCE FEE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO MARCH 31, 2000)
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Government Securities Fund (Division 4)............... 01/16/86 -- 6.21% 4.84% (6.60)%
AGSPC Growth & Income Fund (Division 1)..................... 04/29/94 18.13% -- 19.97 5.73
AGSPC International Equities Fund (Division 2).............. 10/02/89 -- 8.24 11.16 17.43
AGSPC Money Market Fund (Division 6)........................ 01/16/86 -- 3.90 3.60 (2.94)
AGSPC Stock Index Fund (Division 5)......................... 04/20/87 -- 17.25 25.17 9.39
AIM V.I. Capital Appreciation Fund (Division 8)............. 05/05/93 22.63 -- 25.37 56.90
AIM V.I. Diversified Income Fund (Division 9)............... 05/05/93 4.76 -- 5.41 (9.09)
OCCAT Managed Portfolio (Division 3)(1)..................... 08/01/88 -- 15.84 15.01 (4.58)
Oppenheimer Capital Appreciation Fund/VA (Division 10)...... 04/03/85 -- 19.46 30.67 44.06
Oppenheimer High Income Fund/VA (Division 12)............... 04/30/86 -- 11.58 7.57 (8.47)
Oppenheimer Main Street Growth & Income Fund/VA (Division
11)....................................................... 07/05/95 23.64 -- -- 12.73
Oppenheimer Small Cap Growth Fund/VA (Division 13).......... 05/01/98 21.23 -- -- 64.57
Templeton Developing Markets Securities Fund -- Class 2
(Division 14)(2).......................................... 03/01/96 (9.14) -- -- 23.94
Templeton International Securities Fund -- Class 2 (Division
15)(3).................................................... 05/01/92 13.69 15.89 13.72
Van Kampen LIT Emerging Growth Portfolio (Division 7)....... 07/03/95 43.35 -- -- 115.61
</TABLE>
---------------
* The performance figures in the Table reflect the investment performance for
the Funds for the stated periods and should not be used to infer that future
performance will be the same. The Table reflects the historical performance
of each Fund based on investment in a hypothetical Contract from the date of
the Fund's inception. Hypothetical performance is based on the actual
performance of the underlying Fund reduced by Separate Account fees that
would have been incurred during the hypothetical period. The Standard
Average Annual Total Return for Divisions 1-7 will be shown when it becomes
available.
(1) On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, then called Quest For Value Accumulation Trust (the "Old
Trust") was effectively divided into two investment funds, the Old Trust and
the present OCC Accumulation Trust (the "New Trust"), at which time the New
Trust commenced operations. The total net assets of the Managed Portfolio
immediately after the transaction were $682,601,380 with respect to the Old
Trust and $51,345,102 with respect to the New Trust. For the period prior to
September 16, 1994, the performance figure for the Managed Portfolio
reflects the performance of the corresponding Managed Portfolio of the Old
Trust.
(2) Effective May 1, 2000 the Templeton Developing Markets Fund merged with the
Templeton Developing Markets Equity Fund. At the same time as the merger,
the Templeton Developing Markets Fund changed its name to the Templeton
Developing Markets Securities Fund. Accordingly, the performance figures in
the Table for the Fund through March 31, 2000, reflect the historical
performance and inception date of the Templeton Developing Markets Fund.
Additionally, performance for Class 2 shares reflects a blended figure,
combining: (a) for periods prior to Class 2's inception of May 1, 1997,
historical results of Class 1 shares; and (b) for periods after May 1, 1997,
Class 2's results reflecting an additional 12b-1 fee expense which also
affects all future performance. Blended figures assume reinvestment of
dividends and capital gains.
(3) Effective May 1, 2000 the Templeton International Fund merged with the
Templeton International Equity Fund. At the same time as the merger, the
Templeton International Fund changed its name to the Templeton International
Securities Fund. Accordingly, the performance figures in the Table for the
Fund through March 31, 2000, reflect the historical performance and
inception date of the Templeton International Fund. Additionally,
performance for Class 2 shares reflects a blended figure, combining: (a) for
periods prior to Class 2's inception of May 1, 1997, historical results of
Class 1 shares; and (b) for periods after May 1, 1997, Class 2's results
reflecting an additional 12b-1 fee expense which also affects all future
performance. Blended figures assume reinvestment of dividends and capital
gains.
26
<PAGE> 30
TABLE II
AVERAGE ANNUAL TOTAL RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH NO SURRENDER CHARGE OR MAINTENANCE FEE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO MARCH 31, 2000
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Government Securities Fund (Division 4)............... 01/16/86 -- 6.24% 5.44% 0.43%
AGSPC Growth & Income Fund (Division 1)..................... 04/29/94 18.35% -- 20.30 12.77
AGSPC International Equities Fund (Division 2).............. 10/02/89 -- 8.26 11.64 24.48
AGSPC Money Market Fund (Division 6)........................ 01/16/86 -- 3.93 4.23 4.10
AGSPC Stock Index Fund (Division 5)......................... 04/20/87 -- 17.28 25.44 16.43
AIM V.I. Capital Appreciation Fund (Division 8)............. 05/05/93 22.76 -- 25.67 63.95
AIM V.I. Diversified Income Fund (Division 9)............... 05/05/93 4.97 -- 6.00 (2.06)
OCCAT Managed Portfolio (Division 3)(1)..................... 08/01/88 -- 15.87 15.40 2.45
Oppenheimer Capital Appreciation Fund/VA (Division 10)...... 04/03/85 -- 19.49 30.91 51.11
Oppenheimer High Income Fund/VA (Division 12)............... 04/30/86 -- 11.61 8.10 (1.44)
Oppenheimer Main Street Growth & Income Fund/VA (Division
11)....................................................... 07/05/95 24.10 -- -- 19.77
Oppenheimer Small Cap Growth Fund/VA (Division 13).......... 05/01/98 24.03 -- -- 71.63
Templeton Developing Markets Securities Fund -- Class 2
(Division 14)(2).......................................... 03/01/96 (7.59) -- -- 30.98
Templeton International Securities Fund -- Class 2 (Division
15)(3).................................................... 05/01/92 13.74 -- 16.29 20.76
Van Kampen LIT Emerging Growth Portfolio (Division 7)....... 07/03/95 43.70 -- -- 122.68
</TABLE>
---------------
* The performance figures in the Table reflect the investment performance for
the Funds for the stated periods and should not be used to infer that future
performance will be the same. The Table reflects the historical performance
of each Fund based on investment in a hypothetical Contract from the date of
the Fund's inception. Hypothetical performance is based on the actual
performance of the underlying Fund reduced by Separate Account fees that
would have been incurred during the hypothetical period. The Standard
Average Annual Total Return for Divisions 1-7 will be shown when it becomes
available.
(1) On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, then called Quest For Value Accumulation Trust (the "Old
Trust") was effectively divided into two investment funds, the Old Trust and
the present OCC Accumulation Trust (the "New Trust"), at which time the New
Trust commenced operations. The total net assets of the Managed Portfolio
immediately after the transaction were $682,601,380 with respect to the Old
Trust and $51,345,102 with respect to the New Trust. For the period prior to
September 16, 1994, the performance figure for the Managed Portfolio
reflects the performance of the corresponding Managed Portfolio of the Old
Trust.
(2) Effective May 1, 2000 the Templeton Developing Markets Fund merged with the
Templeton Developing Markets Equity Fund. At the same time as the merger,
the Templeton Developing Markets Fund changed its name to the Templeton
Developing Markets Securities Fund. Accordingly, the performance figures in
the Table for the Fund through March 31, 2000, reflect the historical
performance and inception date of the Templeton Developing Markets Fund.
Additionally, performance for Class 2 shares reflects a blended figure,
combining: (a) for periods prior to Class 2's inception of May 1, 1997,
historical results of Class 1 shares; and (b) for periods after May 1, 1997,
Class 2's results reflecting an additional 12b-1 fee expense which also
affects all future performance. Blended figures assume reinvestment of
dividends and capital gains.
(3) Effective May 1, 2000 the Templeton International Fund merged with the
Templeton International Equity Fund. At the same time as the merger, the
Templeton International Fund changed its name to the Templeton International
Securities Fund. Accordingly, the performance figures in the Table for the
Fund through March 31, 2000, reflect the historical performance and
inception date of the Templeton International Fund. Additionally,
performance for Class 2 shares reflects a blended figure, combining: (a) for
periods prior to Class 2's inception of May 1, 1997, historical results of
Class 1 shares; and (b) for periods after May 1, 1997, Class 2's results
reflecting an additional 12b-1 fee expense which also affects all future
performance. Blended figures assume reinvestment of dividends and capital
gains.
27
<PAGE> 31
TABLE III
CUMULATIVE RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH NO SURRENDER CHARGE OR MAINTENANCE FEE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO MARCH 31, 2000)
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
AGSPC Government Securities Fund (Division 4)............... 01/16/86 -- 83.13% 30.35% 0.43%
AGSPC Growth & Income Fund (Division 1)..................... 04/29/94 171.62% -- 151.99 12.77
AGSPC International Equities Fund (Division 2).............. 10/02/89 -- 121.24 73.40 24.48
AGSPC Money Market Fund (Division 6)........................ 01/16/86 -- 47.04 23.04 4.10
AGSPC Stock Index Fund (Division 5)......................... 04/20/87 -- 392.47 210.57 16.43
AIM V.I. Capital Appreciation Fund (Division 8)............. 05/05/93 311.60 -- 213.42 63.95
AIM V.I. Diversified Income Fund (Division 9)............... 05/05/93 39.85 -- 33.80 (2.06)
OCCAT Managed Portfolio (Division 3)(1)..................... 08/01/88 -- 336.26 104.69 2.45
Oppenheimer Capital Appreciation Fund/VA (Division 10)...... 04/03/85 -- 493.59 284.43 51.11
Oppenheimer High Income Fund/VA (Division 12)............... 04/30/86 -- 199.85 47.60 (1.44)
Oppenheimer Main Street Growth & Income Fund/VA (Division
11)....................................................... 07/05/95 177.69 -- -- 19.77
Oppenheimer Small Cap Growth Fund/VA (Division 13).......... 05/01/98 51.21 -- -- 71.63
Templeton Developing Markets Securities Fund -- Class 2
(Division 14)(2).......................................... 03/01/96 (27.54) -- -- 30.98
Templeton International Securities Fund -- Class 2 (Division
15)(3).................................................... 05/01/92 176.83 -- 112.65 20.76
Van Kampen LIT Emerging Growth Portfolio (Division 7)....... 07/03/95 457.68 -- -- 122.68
</TABLE>
---------------
* The performance figures in the Table reflect the investment performance for
the Funds for the stated periods and should not be used to infer that future
performance will be the same. The Table reflects the historical performance
of each Fund based on investment in a hypothetical Contract from the date of
the Fund's inception. Hypothetical performance is based on the actual
performance of the underlying Fund reduced by Separate Account fees that
would have been incurred during the hypothetical period. The Standard
Average Annual Total Return for Divisions 1-7 will be shown when it becomes
available.
(1) On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, then called Quest For Value Accumulation Trust (the "Old
Trust") was effectively divided into two investment funds, the Old Trust and
the present OCC Accumulation Trust (the "New Trust"), at which time the New
Trust commenced operations. The total net assets of the Managed Portfolio
immediately after the transaction were $682,601,380 with respect to the Old
Trust and $51,345,102 with respect to the New Trust. For the period prior to
September 16, 1994, the performance figure for the Managed Portfolio
reflects the performance of the corresponding Managed Portfolio of the Old
Trust.
(2) Effective May 1, 2000 the Templeton Developing Markets Fund merged with the
Templeton Developing Markets Equity Fund. At the same time as the merger,
the Templeton Developing Markets Fund changed its name to the Templeton
Developing Markets Securities Fund. Accordingly, the performance figures in
the Table for the Fund through March 31, 2000, reflect the historical
performance and inception date of the Templeton Developing Markets Fund.
Additionally, performance for Class 2 shares reflects a blended figure,
combining: (a) for periods prior to Class 2's inception of May 1, 1997,
historical results of Class 1 shares; and (b) for periods after May 1, 1997,
Class 2's results reflecting an additional 12b-1 fee expense which also
affects all future performance. Blended figures assume reinvestment of
dividends and capital gains.
(3) Effective May 1, 2000 the Templeton International Fund merged with the
Templeton International Equity Fund. At the same time as the merger, the
Templeton International Fund changed its name to the Templeton International
Securities Fund. Accordingly, the performance figures in the Table for the
Fund through March 31, 2000, reflect the historical performance and
inception date of the Templeton International Fund. Additionally,
performance for Class 2 shares reflects a blended figure, combining: (a) for
periods prior to Class 2's inception of May 1, 1997, historical results of
Class 1 shares; and (b) for periods after May 1, 1997, Class 2's results
reflecting an additional 12b-1 fee expense which also affects all future
performance. Blended figures assume reinvestment of dividends and capital
gains.
28
<PAGE> 32
OTHER CONTRACT FEATURES
--------------------------------------------------------------------------------
CHANGE OF BENEFICIARY
The Beneficiary (if not irrevocable) may usually be changed at any time.
The right to name or change a Beneficiary may be subject to approval by the
spouse. Also, the right to name a Beneficiary other than the spouse may be
subject to certain tax laws and regulations.
If the Owner dies, and there is no Beneficiary, any death benefit will be
payable to the Owner's estate.
If a Beneficiary dies while receiving payments, and there is no co-Beneficiary
to continue to receive payments, any amount still due will be paid to the
Beneficiary's estate.
CANCELLATION -- THE 10 DAY "FREE LOOK"
You may cancel the Contract by returning it to the Company within 10 days after
delivery. A longer period will be allowed if required under state law. A refund
will be made to you within 7 days after receipt of the Contract within the
required period. The refund amount will be your Purchase Payment, adjusted to
reflect investment experience. See "Purchase Period -- Right to Return," in this
prospectus.
WE RESERVE CERTAIN RIGHTS
We reserve the right to:
- Amend the Contract to conform with substitutions of investments;
- Amend the Contract to comply with tax or other laws;
- Operate A.G. Separate Account A as a management investment company under the
1940 Act, in consideration of an investment management fee or in any other
form permitted by law; and
- Deregister A.G. Separate Account A under the 1940 Act, if registration is no
longer required.
29
<PAGE> 33
VOTING RIGHTS
--------------------------------------------------------------------------------
As discussed in the "About A.G. Separate Account A" section of this prospectus,
A.G. Separate Account A holds on your behalf shares of the Funds which comprise
the Variable Account Options. From time to time the Funds are required to hold a
shareholder meeting to obtain approval from their shareholders for certain
matters. As a Contract Owner, you may be entitled to give voting instructions to
us as to how A.G. Separate Account A should vote its Fund shares on these
matters. Those persons entitled to give voting instructions will be determined
before the shareholders meeting is held. For more information about these
shareholder meetings and when they may be held, see the Funds' prospectuses.
WHO MAY GIVE VOTING INSTRUCTIONS
In most cases during the Purchase Period, you will have the right to give voting
instructions for the shareholder meetings. Contract Owners will instruct A.G.
Separate Account A in accordance with these instructions. You will receive proxy
material and a form on which voting instructions may be given before the
shareholder meeting is held.
You will not have the right to give voting instructions if the Contract was
issued in connection with a nonqualified and unfunded deferred compensation
plan.
DETERMINATION OF FUND SHARES
ATTRIBUTABLE TO YOUR ACCOUNT
During Purchase Period
The number of Fund shares attributable to your account will be determined on the
basis of the Purchase Units credited to your account on the record date set for
the Fund shareholder meeting.
During Payout Period or after a Death
Benefit Has Been Paid
The number of Fund shares attributable to your account will be based on the
liability for future variable annuity payments to your payees on the record date
set for the Fund shareholder meeting.
HOW FUND SHARES ARE VOTED
The Funds which comprise the Variable Account Options in the Contract may have a
number
of shareholders including A.G. Separate Account A, the Company, other affiliated
insurance company separate accounts and retirement plans within the American
General group of companies and public shareholders.
A.G. Separate Account A will vote all of the shares of the Funds it holds based
on, and in the same proportion as, the instructions given by all the Contract
Owners invested in that Fund entitled to give instructions at that shareholder
meeting. A.G. Separate Account A will vote the shares of the Funds it holds for
which it receives no voting instruction in the same proportion as the shares for
which voting instructions have been received.
The Company will vote the shares of the Funds it holds based on, and in the same
proportion as, the voting instructions received from Contract Owners.
In the future, we may decide how to vote the shares of the Company or A.G.
Separate Account A in a different manner if permitted at that time under federal
securities law.
CONTRACT OWNER -- the person
entitled to the ownership rights
as stated in this prospectus.
A.G. SEPARATE
ACCOUNT A -- a segregated
asset account established by
the Company under the Texas
Insurance Code. The purpose
of A.G. Separate Account A
is to receive and invest your
Purchase Payments and
Account Value in the Variable
Account Options you have
selected.
30
<PAGE> 34
FEDERAL TAX MATTERS
--------------------------------------------------------------------------------
The Contract provides tax-deferred accumulation over time, but is subject to
federal income and federal excise taxes, mentioned briefly below. You should
refer to the Statement of Additional Information for further details. Section
references are to the Internal Revenue Code ("Code"). We do not attempt to
describe any potential federal estate or gift tax, or any applicable state,
local or foreign tax law other than possible premium taxes mentioned under
"Premium Tax Charge." Remember that future legislation could modify the rules
discussed below, and always consult your personal tax adviser regarding how the
current rules apply to your specific situation.
TYPE OF PLANS
Tax rules vary, depending on whether the Contract is offered under your
employer's tax-qualified retirement program or Section 408(b) IRA or is instead
a nonqualified Contract. The Contract is used under the following types of
retirement arrangements:
- Section 403(b) annuities for employees
of public schools and
Section 501(c)(3) tax-exempt
organizations;
- Section 408(b) individual retirement annuities.
The foregoing Contracts are "Qualified Contracts." Certain series of the
Contract may also be available through a nondeductible Section 408A "Roth"
individual retirement annuity.
Note that the specific terms of the governing employer plan may limit rights and
options otherwise available under a Contract.
In addition, the Contract is also available through "Non-Qualified Contracts."
Such Non-Qualified Contracts generally include unfunded, nonqualified deferred
compensation plans of corporate employers, as well as individual annuity
contracts issued to individuals outside of the context of any formal employer or
employee retirement plan or arrangement. Non-Qualified Contracts generally may
invest only in mutual funds that are not available to the general public outside
of annuity contracts or life insurance contracts.
TAX CONSEQUENCES IN GENERAL
Purchase Payments, distributions, withdrawals, transfers and surrender of a
Contract can each have a tax effect, which varies with the governing retirement
arrangement. Please refer to the detailed explanation in the Statement of
Additional Information, the documents (if any) controlling the retirement
arrangement through which the contract is offered, and your personal tax
adviser.
Purchase Payments under the Contract can be made as contributions by employers,
or as pre-tax or after-tax contributions by employees, depending on the type of
retirement program. After-tax employee contributions constitute "investment in
the Contract." All Qualified Contracts receive deferral of tax on the inside
build-up of earnings on invested Purchase Payments, until a distribution occurs.
See the Statement of Additional Information for special rules, including those
applicable to taxable, non-natural owners of Non-Qualified Contracts.
Transfers among investment options within a variable annuity contract generally
are not taxed at the time of such a transfer. However, in 1986 the Internal
Revenue Service (IRS) indicated that limitations might be imposed with respect
to either the number of investment options available within a contract, or the
frequency of transfers between investment options, or both, in order for the
contract to be treated as an annuity contract for federal income tax purposes.
If imposed, such limitations could be applied to qualified contracts as well as
nonqualified contracts, and the Company can provide no assurance that such
limitations would not be imposed on a retroactive basis to contracts issued
under this prospectus. However, the Company has no present indication that the
IRS intends to impose such limitation, or what the terms or scope of those
limitations might be.
Distributions are taxed differently depending on the program through which the
Contract is offered and the previous tax characterization of the contributions
to which the distribution relates. Generally, the portion of a distribution that
is not considered a return of investment in the Contract is subject to income
tax. For annuity payments, investment in the contract is recovered ratably over
the expected payout period. Special recovery rules might apply in certain
situations.
Amounts subject to income tax may also incur excise tax under the circumstances
described in the Statement of Additional Information. Generally, distributions
would also be subject to some form of federal income tax withholding unless
rolled into another tax-deferred vehicle. Required withholding will vary
according to type of program, type of payment and your tax status. In addition,
amounts received under all
31
<PAGE> 35
--------------------------------------------------------------------------------
Contracts may be subject to state income tax withholding requirements.
Investment earnings on contributions to Non-Qualified Contracts that are not
owned by natural persons will be taxed currently to the owner, and such
contracts will not be treated as annuities for federal income tax purposes.
EFFECT OF TAX-DEFERRED ACCUMULATIONS
The chart below compares the results from
Premium Payments made to:
- The Contract issued to a tax favored retirement program purchased with
pre-tax premium payments;
- A non-qualified Contract purchased with after-tax Premium Payments and;
- Conventional savings vehicles such as savings accounts.
THE POWER OF TAX-DEFERRED GROWTH
[BAR GRAPH]
This hypothetical chart compares the results of (1) contributing $100 per month
to a conventional, non-tax-deferred plan, (2) contributing $100 to a
nonqualified, tax-deferred annuity, and (3) contributing $100 per month ($138.89
since contributions are made before tax) to a tax qualified plan such as a
403(b) annuity. The chart assumes a 28% tax rate and an 8% fixed rate of return.
Variable options incur mortality and expense risk fee and administration fee
charges and may also incur account maintenance fees and surrender charges. The
chart does not reflect the deduction of any such fees. An additional 10% penalty
tax may apply to withdrawals before age 59 1/2. This information is for
illustrative purposes only and is not a guarantee of future return.
Unlike savings accounts, Premium Payments made to tax qualified retirement
programs and Non-Qualified Contracts generally provide tax deferred treatment on
earnings. In addition, Premium Payments made to tax qualified retirement
programs ordinarily are not subject to federal income tax until withdrawn. As
shown above, investing in a tax qualified program increases the accumulation
power of savings over time. The more taxes saved and reinvested in the program,
the more the accumulation power effectively grows over the years.
To further illustrate the advantages of tax deferred savings using a 28% federal
tax bracket, an annual fixed yield (BEFORE THE DEDUCTION OF ANY FEES OR CHARGES)
of 8% under a tax qualified retirement program in which tax savings were
reinvested has an equivalent after-tax annual fixed yield of 5.76% under a
conventional savings program. THE 8% YIELD ON THE TAX QUALIFIED PROGRAM WILL BE
REDUCED BY THE IMPACT OF FEDERAL INCOME TAXES UPON WITHDRAWAL. The yield will
vary depending upon the timing of withdrawals. The previous chart represents
(without factoring in fees and charges) after-tax amounts that would be
received.
By taking into account the current deferral of federal income taxes,
contributions to tax qualified retirement programs increase the amount available
for savings by decreasing the relative current out-of-pocket cost (referring to
the effect on annual net take-home pay) of the investment. The chart across
illustrates this principle by comparing a pre-tax contribution to a tax
qualified retirement plan with an after-tax contribution to a conventional
savings account:
PAYCHECK COMPARISON
<TABLE>
<CAPTION>
TAX QUALIFIED CONVENTIONAL
RETIREMENT SAVINGS
PROGRAM ACCOUNT
------------- ------------
<S> <C> <C>
Annual amount available
for savings before
federal taxes......... $2,000 $2,000
Current federal income
tax due on Purchase
Payments.............. 0 (560)
Net retirement plan
Purchase Payments..... $2,000 $1,440
</TABLE>
This chart assumes a 28% federal income tax rate. The $560 that is paid toward
current federal income taxes reduces the actual amount saved in the conventional
savings account to $1,440 while the full $2,000 is contributed to the
tax-qualified program, subject to being taxed upon withdrawal. Stated otherwise,
to reach an annual retirement savings goal of $2,000, the contribution to a
tax-qualified retirement program results in a current out-of-pocket expense of
$1,440 while the contribution to a conventional savings account requires the
full $2,000 out-of-pocket expense.
32
<PAGE> 36
--------------------------------------------------------------------------------
The tax-qualified retirement program represented in this chart is a plan type,
such as one under Section 403(b) of the Code which allows participants to
exclude contributions, within limits, from gross income.
33
<PAGE> 37
YEAR 2000
--------------------------------------------------------------------------------
As of June 29, 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.
34
<PAGE> 38
Please tear off, complete and return the form below to the Annuity Service
Center at the address shown on the inside back cover of this Prospectus. A
Statement of Additional Information may also be ordered by calling
1-800-424-4990.
................................................................................
THE CONTRACTS
Please send me a free copy of the Statement of Additional Information for A.G.
Separate Account A (ElitePlus Value).
(Please Print or Type)
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------------------
Name: Policy #
------------------------------------------------- ------------------------------------------
Address:
----------------------------------------------
------------------------------------------------------
Social Security Number:
-------------------------------
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 39
(This page intentionally left blank)
<PAGE> 40
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information.............................. 3
The Company...................................... 3
Marketing Information............................ 3
Endorsements and Published Ratings............... 4
Types of Variable Annuity Contracts.............. 5
Variable Annuity Contract General Provisions..... 5
Federal Tax Matters.............................. 6
Tax Consequences of Purchase Payments........ 6
Tax Consequences of Distributions............ 7
Special Tax Consequences -- Early
Distribution.............................. 8
Special Tax Consequences -- Required
Distributions............................. 9
Tax Free Rollovers, Transfers and
Exchanges................................. 10
Exchange Privilege............................... 10
Calculation of Surrender Charge.................. 11
Illustration of Surrender Charge on Total
Surrender................................. 11
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................. 11
Purchase Unit Value.............................. 12
Illustration of Calculation of Purchase Unit
Value..................................... 12
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Illustration of Purchase of Purchase Units... 12
Performance Calculations......................... 12
Illustration of Calculation of Current Yield
for Money Market Division................. 12
Illustration of Calculation of Effective
Yield for Money Market Division........... 13
Standardized Yield for Bond Fund Divisions....... 13
Illustration of Calculation of Standardized
Yield for Bond Fund Divisions............. 13
Calculation of Average Annual Total Return... 14
Performance Information.......................... 15
Payout Payments.................................. 17
Assumed Investment Rate...................... 17
Amount of Payout Payments.................... 17
Payout Unit Value............................ 17
Illustration of Calculation of Payout Unit
Value..................................... 18
Illustration of Payout Payments.............. 18
Distribution of Variable Annuity Contracts....... 19
Experts.......................................... 19
Comments on Financial Statements................. 19
</TABLE>
<PAGE> 41
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOR ADDITIONAL INFORMATION ABOUT THE CONTRACTS
CONTACT THE ANNUITY SERVICE CENTER:
205 E. 10TH AVENUE
AMARILLO, TEXAS 79101
1-800-424-4990
PURCHASE PAYMENTS SHOULD BE SENT TO:
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
P.O. BOX 5429
BOSTON, MA 02206-5429 (IF SENT BY MAIL)
OR
STATE STREET BANK AND TRUST COMPANY
ATTENTION LOCK BOX A3W
1776 HERITAGE DRIVE
NORTH QUINCY, MA 02171 (IF SENT BY OVERNIGHT DELIVERY)
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
1-800-424-4990
FOR UNIT VALUE INFORMATION CALL: 1-800-424-4990
FOR ASSET TRANSFERS BY TELEPHONE CALL: 1-800-424-4990
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 42
[AMERICAN GENERAL FINANCIAL GROUP LOGO]
ELITEPLUS(R) VALUE IS
ISSUED BY AMERICAN GENERAL
ANNUITY INSURANCE COMPANY
Executive Offices: Houston, Texas
Annuity Service Center:
205 E. 10th Avenue
P.O. Box 871
Amarillo, Texas 79105-0871
1-800-424-4990
American General Annuity
Insurance Company is a member
of the American General
Financial Group, the marketing
name for American General
Corporation and its subsidiaries.
<PAGE> 43
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
A.G. SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER FLEXIBLE PREMIUM
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS
ELITEPLUS(R) VALUE
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FORM N-4 PART B
AUGUST 1, 2000
This Statement of Additional Information is not a prospectus but contains
information in addition to that set forth in the prospectus for the Individual
Flexible Premium Fixed and Variable Deferred Annuity Contracts dated August 1,
2000 ("Contracts") and should be read in conjunction with the prospectus. The
terms used in this Statement of Additional Information have the same meaning as
those set forth in the prospectus. A prospectus may be obtained by calling or
writing the Company, at 205 E. 10th Avenue, Amarillo, Texas 79101;
1-800-424-4990. Prospectuses are also available from registered sales
representatives.
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<PAGE> 44
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information.............................. 3
The Company...................................... 3
Marketing Information............................ 3
Endorsements and Published Ratings............... 4
Types of Variable Annuity Contracts.............. 5
Variable Annuity Contract General Provisions..... 5
Federal Tax Matters.............................. 6
Tax Consequences of Purchase Payments........ 6
Tax Consequences of Distributions............ 7
Special Tax Consequences -- Early
Distribution.............................. 8
Special Tax Consequences -- Required
Distributions............................. 9
Tax Free Rollovers, Transfers and
Exchanges................................. 10
Exchange Privilege............................... 10
Calculation of Surrender Charge.................. 11
Illustration of Surrender Charge on Total
Surrender................................. 11
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................. 11
Purchase Unit Value.............................. 12
Illustration of Calculation of Purchase Unit
Value..................................... 12
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Illustration of Purchase of Purchase Units... 12
Performance Calculations......................... 12
Illustration of Calculation of Current Yield
for Money Market Division................. 12
Illustration of Calculation of Effective
Yield for Money Market Division........... 13
Standardized Yield for Bond Fund Divisions....... 13
Illustration of Calculation of Standardized
Yield for Bond Fund Divisions............. 13
Calculation of Average Annual Total Return... 14
Performance Information.......................... 15
Payout Payments.................................. 17
Assumed Investment Rate...................... 17
Amount of Payout Payments.................... 17
Payout Unit Value............................ 17
Illustration of Calculation of Payout Unit
Value..................................... 18
Illustration of Payout Payments.............. 18
Distribution of Variable Annuity Contracts....... 19
Experts.......................................... 19
Comments on Financial Statements................. 19
</TABLE>
2
<PAGE> 45
GENERAL INFORMATION
THE COMPANY
American General Annuity Insurance Company develops, markets, and issues
annuity products through niche distribution channels. We market single-premium
deferred annuities to the savings and retirement markets, flexible-premium
deferred annuities to the tax-qualified retirement market, and single-premium
immediate annuities to the structured settlement and retirement markets. The
Company distributes its annuity products primarily through financial
institutions, general agents, and specialty brokers. As of December 31, 1999,
the Company had over $18 billion in assets.
The Company is licensed to do business in 47 states, Puerto Rico and the
District of Columbia and is incorporated in the state of Texas. On February 25,
1998, the Company became an indirect, wholly-owned subsidiary of American
General Corporation. On this date, the Company changed its name from Western
National Life Insurance Company to American General Annuity Insurance Company.
Our executive offices are located at 2929 Allen Parkway, Houston, TX 77019.
MARKETING INFORMATION
The Company may, from time to time, refer to itself in certain marketing
materials as American General Annuity. The Company may, from time to time, refer
to American General Financial Group and/or American General Retirement Services.
American General Financial Group is the marketing name for American General
Corporation and its subsidiaries. American General Retirement Services is a
financial reporting segment of American General Corporation. The Company and The
Variable Annuity Life Insurance Company are the two insurance companies that
constitute American General Retirement Services.
The Company may compare the performance of the Divisions to the S&P 500
Index, S&P 500 & Lehman Brothers Aggregate Index, Lipper Variable Annuity Flex
Portfolio IX, Lipper Variable Annuity Mid-Cap Index, Salomon Brothers 1-10 Yr.
Treasury Index, Europe, Australia and Far East Index, or any other appropriate
market index. The indexes are not managed funds and have no identifiable
investment objectives.
The Company, in its marketing efforts, may also refer to the following
investment advisers referenced in the Prospectus.
The Company may, from time to time, refer to A I M Advisors, Inc. (AIM)
and/or AIM Management Group Incorporated (AIM Management), as investment adviser
to the AIM V.I. Capital Appreciation Fund (underlying Division Eight) and the
AIM V.I. Diversified Income Fund (underlying Division Nine). AIM has acted as an
investment adviser since its organization in 1976. Today, AIM, together with its
subsidiaries, advises or manages over 120 investment portfolios encompassing a
broad range of investment objectives.
The Company may, from time-to-time, refer to OppenheimerFunds, Inc.
(OppenheimerFunds) as investment adviser to the Oppenheimer Capital Appreciation
Fund/VA (underlying Division Ten), the Oppenheimer Main Street Growth & Income
Fund/VA (underlying Division Eleven) the Oppenheimer High Income Fund/VA
(underlying Division Twelve) and the Oppenheimer Small Cap Growth Fund/VA
(underlying Division Thirteen). Oppenheimer Funds is one of the largest and most
respected investment managers in the mutual fund business. Founded in 1959,
Oppenheimer Funds (and its subsidiary) manages more than $120 billion in more
than a million mutual fund accounts as of December 31, 1999. Oppenheimer advises
a broad range of mutual funds, covering the risk/reward spectrum while combining
discipline, collective insight and individual accountability into its investment
process.
The Company may, from time-to-time, refer to OpCap Advisors (OpCap) as
investment adviser to the OCCAT Managed Portfolio (underlying Division Three).
OpCap is a subsidiary of Oppenheimer Capital, an investment advisory firm with
approximately $56 billion of assets under management as of September 30, 1999.
The Company may, from time-to-time refer to Templeton Asset Management,
Ltd. (Templeton) as investment adviser to the Templeton Developing Markets
Securities Fund (underlying Division Fourteen) and to Templeton Investment
Council, Inc. (Templeton Investments) as investment adviser to the Templeton
International Securities
3
<PAGE> 46
Fund (underlying Division Fifteen). Franklin(R) Templeton(R) Investments has
served investors for more than fifty years, having grown from a small family of
funds to a global financial services leader. Today, Franklin Templeton
Investments serves more than 7 million shareholders, who, as of November 30,
1999, have entrusted Franklin Templeton Investments with more than $224 billion
in assets.
The Company may, from time-to-time, refer to Van Kampen Asset Management
Inc. (Van Kampen) as investment adviser to the Van Kampen LIT Emerging Growth
Portfolio (underlying Division Seven). Van Kampen is a wholly owned subsidiary
of Van Kampen Investments Inc., which is an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. Van Kampen Investments is a diversified asset
management company with more than two million retail investor accounts,
extensive capabilities for managing institutional portfolios, and more than $75
billion under management or supervision. Van Kampen Investments' more than 50
open-end and 39 closed-end funds and more than 2,500 unit investment trusts are
professionally distributed by leading financial advisers nationwide.
The Company may, from time-to-time, refer to The Variable Annuity Life
Insurance Company (VALIC) as investment adviser to the American General Series
Portfolio Company (AGSPC) Money Market Fund (underlying Division Six), AGSPC
Government Securities Fund (underlying Division Four), AGSPC Growth and Income
Fund (underlying Division One), AGSPC International Equities Fund (underlying
Division Two), and AGSPC Stock Index Fund (underlying Division Five). VALIC, a
stock life insurance company, has been in the investment advisory business since
1960. VALIC as of December 31, 1999, had over $13 billion in assets under
management. VALIC, along with the Company, is a member of the American General
Corporation group of companies.
The Company may, from time-to-time compare the performance of the funds
that serve as investment vehicles for the Contract to the performance of certain
market indices. These indices are described in the "Performance Information"
Section of this Statement of Additional Information.
ENDORSEMENTS AND
PUBLISHED RATINGS
Also from time to time, the rating of the Company as an insurance company
by A. M. Best may be referred to in advertisements or in reports to Contract
Owners. Each year the A. M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of the
life/health insurance industry. Best's Ratings range from A++ to F.
In addition, the claims-paying ability of the Company as measured by the
Standard and Poor's Ratings Group may be referred to in advertisements or in
reports to Contract Owners. A Standard and 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 and Poor's ratings range from AAA to D.
Further, from time to time the Company may refer to Moody's Investor's
Service's rating of the Company. Moody's Investor's Service's financial strength
ratings indicate an insurance company's ability to discharge senior policyholder
obligations and claims and are based on an analysis of the insurance company and
its relationship to its parent, subsidiaries and affiliates. Moody's Investor's
Service's ratings range from Aaa to C.
The Company may additionally refer to its Duff & Phelp's rating. A Duff &
Phelp's rating is an assessment of a company's insurance claims paying ability.
Duff & Phelp's ratings range from AAA to CCC.
Ratings relate to the claims paying ability of the Company's General
Account and not the investment characteristics of the Separate Account.
The Company may from time to time, refer to Lipper Analytical Services
Incorporated ("Lipper"), Morningstar, Inc. ("Morningstar") and CDA/Wiesenberger
Investment Companies (CDA/Wiesenberger) when discussing the performance of its
Divisions. Lipper, Morningstar and CDA/Wiesenberger are leading publishers of
statistical data about the investment company industry in the United States.
4
<PAGE> 47
Additionally, the Company may compare the performance of the Divisions to
categories published by Lipper and Morningstar. The published categories which
may be utilized in comparison with the performance of the Divisions include the
Morningstar Growth and Income Mutual Fund Category, Morningstar Aggressive
Growth Mutual Fund Category, Morningstar Growth Mutual Fund Category,
Morningstar International Stock Mutual Fund Category, Lipper Growth and Income
Mutual Fund Category, Lipper Small Company Growth Mutual Fund Category, Lipper
Growth Mutual Fund Category and Lipper International Mutual Fund Category.
Additional Lipper or Morningstar categories may be utilized if they are deemed
by the Company relevant to the performance of the Company's Divisions.
The Company may, from time to time, refer to The Variable Annuity Research
& Data Services (VARDS) Report. The VARDS Report offers monthly analysis of the
variable annuity industry, including marketing and performance information.
Finally, the Company will utilize as a comparative measure for the
performance of its Funds the Consumer Price Index ("CPI"). The CPI is a measure
of change in consumer prices, as determined in a monthly survey of the U.S.
Bureau of Labor Statistics. Housing costs, transportation, food, electricity,
changes in taxes and labor costs are among the CPI components. The CPI provides
a tool for determining the impact of inflation on an individual's purchasing
power.
TYPES OF VARIABLE ANNUITY
CONTRACTS
The Contracts offered in connection with the prospectus to which this
Statement of Additional Information relates, are flexible payment deferred
annuity Contracts.
Under flexible payment Contracts, Purchase Payments generally are made
until retirement age is reached. However, no Purchase Payments are required to
be made after the first payment. Purchase Payments are subject to any minimum
payment requirements under the Contract. Purchase Payments are invested and
accumulate on a fixed or variable basis until the date the Contract Owner
selects to commence annuity payments.
The majority of these Contract will be sold to individuals through
financial institutions in the Non-Qualified market. A smaller number of these
contracts will be sold in the Qualified market through 403(b) plans and certain
IRA situations.
The Contracts are non-participating and will not share in any of the
profits of the Company.
VARIABLE ANNUITY CONTRACT GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of the Contract, the
Application, if any, and any riders or endorsements attached to the Contract.
The Contract may be changed or altered only by an authorized officer of the
Company. A change or alteration must be made in writing.
MINIMUM CONTRACT VALUE: If the minimum Contract Value falls below the
minimum Contract Value shown in the Contract, then the Company reserves the
right to surrender the Contract and pay the Contract Value to the Owner.
MISSTATEMENT OF AGE OR SEX: If the Age or sex of any Annuitant has been
misstated, any Annuity benefits payable will be the Annuity benefits provided by
the correct Age or sex. After Annuity Payments have begun, any underpayments
will be made up in one sum with the next Annuity Payment. Any overpayments will
be deducted from future Annuity Payments until the total is repaid.
INCONTESTABILITY: The Contract is incontestable.
MODIFICATION: The Contract may be modified in order to maintain compliance
with applicable state and federal law. When required, the Company will obtain
the Owner's approval of changes and gain approval from appropriate regulatory
authorities.
NON-PARTICIPATING: The Contract will not share in any distribution of
dividends.
EVIDENCE OF SURVIVAL: The Company may require satisfactory evidence of
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE: The Company may require evidence of Age of any Annuitant or
Owner.
PROTECTION OF PROCEEDS: To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any creditor
if the person is entitled to them under the Contract. No payment and no amount
under the Contract can be taken or assigned in advance of its
5
<PAGE> 48
payment date unless the Company receives the
Owner's written consent.
REPORTS: At least once each calendar year, the Company will furnish the
Owner with a report showing the Contract Value as of a date not more than four
months prior to the date of mailing, and will provide any other information as
may be required by law. Reports will be sent to the last known address of the
Owner.
TAXES: Any taxes paid to any governmental entity relating to the Contract
will be deducted from the Purchase Payment or Contract Value when incurred. The
Company will, in its sole discretion, determine when taxes have resulted from:
the investment experience of the Separate Account; receipt by the Company of the
Purchase Payments; or commencement of Annuity Payments. The Company may, in its
sole discretion, pay taxes when due and deduct that amount from the Contract
Value at a later date. Payment at an earlier date does not waive any right the
Company may have to deduct amounts at a later date. While the Company is not
currently maintaining a provision for federal income taxes with respect to the
Separate Account, the Company has reserved the right to establish a provision
for income taxes if it determines, in its sole discretion, that it will incur a
tax as a result of the operation of the Separate Account. The Company will
deduct for any income taxes incurred by it as a result of the operation of the
Separate Account whether or not there was a provision for taxes and whether or
not it was sufficient. The Company will deduct any withholding taxes required by
applicable law.
REGULATORY REQUIREMENTS: All values payable under the Contract, including
any paid-up annuity, cash withdrawal or death benefits that may be available,
will not be less than the minimum benefits required by the laws and regulations
of the state in which the Contract is delivered.
FEDERAL TAX MATTERS
This Section summarizes the major tax consequences of contributions,
payments, and withdrawals under the Contracts, during life and at death.
TAX CONSEQUENCES OF PURCHASE PAYMENTS
403(b) Annuities. Purchase Payments made by Section 501(c)(3) tax-exempt
organizations and public educational institutions toward Contracts for their
employees are excludable from the gross income of employees, to the extent
aggregate Purchase Payments do not exceed several tax limitations. This gross
income exclusion applies both to employer contributions and to your voluntary
and nonelective salary reduction contributions.
Your voluntary salary reduction contributions are generally limited to
$10,500 ($9,500 before 1998), although additional, "catch-up" contributions are
permitted under certain circumstances. Combined employer and salary reduction
contributions are generally limited to the smallest of $30,000, approximately
25% of salary, or an exclusion allowance which takes into account a number of
factors. In addition, employer contributions for highly compensated employees
may be further limited by applicable nondiscrimination rules.
408(b) Individual Retirement Annuities ("408(b) IRAs"). Annual
tax-deductible contributions for 408(b) IRA Contracts are limited to the lesser
of $2,000 or 100% of compensation, and generally may be made only by individuals
who:
(i) are not active participants in another
retirement plan, and are not married;
(ii) are not active participants in another
retirement plan, are married, but either (a) the spouse is not an active
participant in another retirement plan, or (b) the spouse is an active
participant, but the couple's adjusted gross income does not exceed
$150,000.
(iii) are active participants in another retirement
plan, are unmarried, and have adjusted gross income of $32,000 (2000
figure) or less ($25,000 or less prior to 1998; adjusted upward for
inflation after 1998); or
(iv) are active participants in another retirement
plan, are married, and have adjusted gross income of $52,000 (2000 figure)
or less ($40,000 or less prior to in 1998; adjusted upward for inflation
after 1998).
Active participants in other retirement plans whose adjusted gross income
exceeds the limits in (ii), (iii) or (iv) by less than $10,000 are entitled to
make deductible 408(b) IRA contributions in proportionately reduced amounts. If
a 408(b) IRA is established for a nonworking spouse who has no compensation, the
annual tax-deductible Purchase Payments for both spouses' Contracts cannot
exceed the lesser of $4,000 or 100% of the working spouse's earned income, and
no more than $2,000
6
<PAGE> 49
may be contributed to either spouse's IRA for any year.
You may be eligible to make nondeductible IRA contributions of an amount
equal to the excess of:
(i) the lesser of $2,000 ($4,000 for you and your
spouse's IRA) or 100% of compensation, over
(ii) your applicable IRA deduction limit.
You may also make rollover contributions to an IRA of eligible rollover
amounts from other qualified plans and contracts. See Tax-Free Rollovers,
Transfers and Exchanges.
408A "Roth" Individual Retirement Annuities ("408A "Roth" IRAs"). After
1997, annual nondeductible contributions for 408A "Roth" IRA Contracts are
limited to the lesser of $2,000 or 100% of compensation, and may be made only by
individuals who:
(i) are unmarried and have adjusted gross
income of $95,000 or less; or
(ii) are married and filing jointly and have
adjusted gross income of $150,000 or less.
The available nondeductible 408A "Roth" IRA contribution is reduced
proportionately to zero where adjusted gross income exceeds the limit in (i) by
$15,000 or less, or the limit in (ii) by $10,000 or less. Similarly, individuals
who are married and filing separately and whose adjusted gross income is less
than $10,000 may make a contribution to a Roth IRA of a portion of the otherwise
applicable $2,000 or 100% of compensation limit.
All contributions to 408(b) IRAs, traditional nondeductible IRAs and 408A
"Roth" IRAs must be aggregated for purposes of the $2,000 annual contribution
limit.
SEP. Employer contributions under a SEP are made to a separate individual
retirement account or annuity established for each participating employee, and
generally must be made at a rate representing a uniform percent of participating
employees' compensation. Employer contributions are excludable from employees'
taxable income and cannot exceed the lesser of $30,000 or 25% of your
compensation.
Through 1996, employees of certain small employers (other than tax-exempt
organizations) were permitted to establish plans allowing employees to
contribute pretax, on a salary reduction basis, to the SEP. These salary
reduction contributions may not exceed $7,000, indexed for inflation in later
years. Such plans, if established by December 31, 1996, may still allow
employees to make these contributions.
SIMPLE IRA. Employer and employees contributions under a SIMPLE Retirement
Account Plan are made to a separate individual retirement account or annuity for
each employee. Employee salary reduction contributions cannot exceed $6,000 in
any year. Employer contributions can be a matching or a nonelective contribution
of a percentage as specified in the Code. Only employers with 100 or fewer
employees can maintain a SIMPLE IRA plan, which must also be the only plan the
employer maintains.
Non-Qualified Contracts. Purchase Payments made under Non-Qualified
Contracts are neither excludible from the gross income of the Contract Owner nor
deductible for tax purposes. However, any increase in the Purchase Unit Value of
a Non-Qualified Contract resulting from the investment performance of AGA
Separate Account A is not taxable to the Contract Owner until received by him.
Contract Owners that are not natural persons, however, are currently taxable on
any annual increase in the Purchase Unit Value attributable to Purchase Payments
made after February 28, 1986 to such Contracts.
TAX CONSEQUENCES OF DISTRIBUTIONS
403(b) Annuities. Voluntary salary reduction amounts accumulated after
December 31, 1988, and earnings on voluntary contributions before and after that
date, may not be distributed before one of the following:
(1) attainment of age 59 1/2;
(2) separation from service;
(3) death;
(4) disability, or
(5) hardship (hardship distributions are limited to salary reduction
contributions only, exclusive of earnings thereon).
Similar restrictions will apply to all amounts transferred from a Section
403(b)(7) custodial account (other than rollover contributions). Contribu-
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<PAGE> 50
tions which are not subject to these restrictions, such as employee
contributions to a Section 403(b) annuity, may be subject to restrictions under
the sponsoring employer's plan, if any. Distributions are taxed as ordinary
income to the recipient in accordance with Section 72.
408(b) IRA, SEPs and SIMPLE IRAs. Distributions are generally taxed as
ordinary income to the recipient. Conversions of a 408(b) or traditional IRA to
a 408A Roth IRA, where permitted, are generally taxable in the year of the
rollover or conversion. Such rollovers of conversions completed in 1998 are
generally eligible for pro-rata federal income taxation over four years.
Individuals with adjusted gross income over $100,000 are generally ineligible
for such conversions, regardless of marital status, as are married individuals
who file separately.
408A "Roth" IRAs. "Qualified" distributions upon attainment of age 59 1/2,
death, disability or for first-time homebuyer expenses are tax-free as long as
five or more years have passed since the first contribution to taxpayer's first
408A "Roth" IRA. The five-year holding period may be different for determining
whether a distribution allowable to a conversion contribution is subject to the
10% penalty tax. Qualified distributions may be subject to state income tax in
some states. Other distributions are generally taxable to the extent that the
distribution exceeds purchase payments.
Non-Qualified Contracts. Partial redemptions from a Non-Qualified Contract
purchased after August 13, 1982 (or allocated to post-August 13, 1982 Purchase
Payments under a pre-existing Contract), generally are taxed as ordinary income
to the extent of the accumulated income or gain under the Contract if they are
not received as an annuity. Partial redemptions from a Non-Qualified Contract
purchased before August 14, 1982 are taxed only after the Contract Owner has
received all of his pre-August 14, 1982 investment in the Contract. The amount
received in a complete redemption of a Non-Qualified Contract (regardless of the
date of purchase) will be taxed as ordinary income to the extent that it exceeds
the Contract Owner's investment in the Contract. Two or more Contracts purchased
from the Company (or an affiliated company) by a Contract Owner within the same
calendar year, after October 21, 1988, are treated as a single Contract for
purposes of measuring the income on a partial redemption or complete surrender.
When payments are received as an annuity, the Contract Owner's investment
in the Contract is treated as received ratably and excluded ratably from gross
income as a tax-free return of capital, over the expected payment period of the
annuity. Individuals who begin receiving annuity payments on or after January 1,
1987 can exclude from income only their unrecovered investment in the Contract.
Upon death prior to recovering tax-free their entire investment in the Contract,
such individuals generally are entitled to deduct the unrecovered amount on
their final tax return.
SPECIAL TAX CONSEQUENCES -- EARLY DISTRIBUTION
403(b) Annuities, 408(b) IRAs, SEPs and SIMPLE IRAs. Taxable distributions
received before the recipient attains age 59 1/2 generally are subject to a 10%
penalty tax in addition to regular income tax. Distributions on account of the
following generally are excepted from this penalty tax:
(1) death;
(2) disability;
(3) separation from service after a participant reaches age 55 (only applies to
qualified plans and 403(b) annuities);
(4) separation from service at any age if the distribution is in the form of
substantially equal periodic payments over the life (or life expectancy) of
the Participant (or the Participant and Beneficiary); and
(5) distributions which do not exceed the employee's tax-deductible medical
expenses for the taxable year of receipt.
Separation from service is not required for distributions from an IRA, SEP
or SIMPLE IRA under #4 above. Certain distributions from a SIMPLE IRA within two
years after first participating in the plan may be subject to a 25% penalty,
rather than a 10% penalty.
After 1997, distributions from 408(b) IRAs on account of the following
additional reasons are also excepted from this penalty tax:
(6) distributions up to $10,000 (in the aggregate) to cover costs of acquiring,
constructing or reconstructing the residence of a first-time homebuyer;
8
<PAGE> 51
(7) distributions to cover certain costs of higher education tuition, fees,
books, supplies and equipment for the IRA owner, a spouse, child or
grandchild; and
(8) distributions to cover certain medical care or long-term care insurance
premiums, for individuals who have received federal or state unemployment
compensation for 12 consecutive months.
408A "Roth" IRAs. Distributions, other than "qualified" distributions where
the five-year holding rule is met, are generally subject to the same 10% penalty
tax as other IRAs.
SPECIAL TAX CONSEQUENCES -- REQUIRED
DISTRIBUTIONS
403(b) Annuities. Generally, minimum required distributions must commence
no later than April 1 of the calendar year following the later of the calendar
year in which the Participant attains age 70 1/2 or the calendar year in which
the Participant retires. Required distributions must be made over a period that
does not exceed the life or life expectancies of the Participant (or lives or
joint life expectancies of the Participant and Beneficiary). The minimum amount
payable can be determined several different ways. A penalty tax of 50% is
imposed on the amount by which the minimum required distribution in any year
exceeds the amount actually distributed in that year.
Amounts accumulated under a Contract on December 31, 1986 may be paid in a
manner that meets the above rule or, alternatively:
(i) should begin to be paid when the Participant attains age 75; and
(ii) the present value of payments expected to be made over the life of the
Participant, (under the option chosen) must exceed 50% of the present value
of all payments expected to be made (the "50% rule").
The 50% rule will not apply if a Participant's spouse is the joint
annuitant. Notwithstanding these pre-January 1, 1987 rules, the entire contract
balance must meet the minimum distribution incidental benefit requirement of
Section 403(b)(10).
At the Participant's death before payout has begun, Contract amounts
generally either must be paid to the Beneficiary within 5 years, or must begin
within 1 year of death and be paid over the life or life expectancy of the
Beneficiary. If death occurs after commencement of (but before full) payout,
distributions generally must continue at least as rapidly as under the method
elected by the Participant and in effect at the time of death.
A participant generally may aggregate his or her 403(b) contracts and
accounts for purposes of satisfying these requirements, and withdraw the
required distribution in any combination from such contracts or accounts, unless
the plan, contract, or account otherwise provides.
408(b) IRAs, SEPs and SIMPLE IRAs. Minimum distribution requirements are
generally the same as described above for 403(b) Annuities, except that:
(1) there is no exception for pre-1987 amounts; and
(2) there is no available postponement, past April 1 of the calendar year
following the calendar year in which age 70 1/2 is attained.
A participant generally may aggregate his or her IRAs for purposes of
satisfying these requirements, and withdraw the required distribution in any
combination from such contracts or accounts, unless the contract or account
otherwise provides.
408A "Roth" IRAs. Minimum distribution requirements generally applicable to
403(b) Annuities, 408(b) IRAs, SEPs and 457 Plans do not apply to 408A "Roth"
IRAs during the owner's lifetime, but generally do apply after the owner's
death.
A beneficiary generally may aggregate his or her Roth IRAs inherited from
the same decedent for purposes of satisfying these requirements, and withdraw
the required distribution in any combination from such contracts or accounts,
unless the contract or account otherwise provides.
Non-Qualified Contracts. Tax laws do not require commencement of
distributions from Non-Qualified Contracts at any particular time during the
Owner's lifetime, provided that the Owner is a natural person, and generally do
not limit the duration of annuity payments.
At the Participant's death before payout has begun, Contract amounts
generally either must be paid to the Beneficiary within 5 years, or must begin
within 1 year of death and be paid over the life or life expectancy of the
Beneficiary. If death occurs
9
<PAGE> 52
after commencement of (but before full) payout, distributions generally must
continue at least as rapidly as under the method elected by the Participant at
the time of death.
TAX-FREE ROLLOVERS, TRANSFERS AND EXCHANGES
403(b) Annuities. Tax-free transfers between 403(b) annuity contracts
and/or 403(b)(7) custodial accounts, and tax-free rollovers from 403(b) programs
to 408(b) IRAs or other 403(b) programs, are permitted under certain
circumstances.
408(b) IRAs. Funds may be transferred tax-free to a 408(b) IRA Contract,
from a 403(b) Annuity, or 401(a) or 403(a) Qualified Plan under certain
conditions. These amounts may subsequently be rolled over on a tax-free basis to
another 403(b) Annuity Contract or 401(a) or 403(a) Qualified Plan from this
"conduit" IRA if no additional contributions have been made to that IRA. In
addition, tax-free rollovers may be made from one 408(b) IRA (other than a Roth
IRA) to another provided that no more than one such rollover is made during any
twelve-month period.
408A "Roth" IRAs. Funds may be transferred tax-free from one 408A "Roth"
IRA to another. Funds in a 408(b) IRA may be rolled in a taxable transaction to
a 408A "Roth" IRA by individuals who:
(i) have adjusted gross income of $100,000 or less, whether single or married
filing jointly; and
(ii) are not married filing separate returns.
Special, complicated rules governing holding periods, escape from the 10%
penalty tax and ratable recognition of 1998 income also apply to rollovers from
408(b) IRAs to 408A "Roth" IRAs, and may be subject to further modification by
Congress. You should consult your tax advisor regarding the application of these
rules.
SEPs. Funds may be rolled over tax free from one SEP only to another SEP or
a 408(b) IRA.
Non-Qualified Contracts. Certain of the Non-Qualified single payment
deferred annuity Contracts permit the Contract Owner to exchange the Contract
for a new deferred annuity contract prior to the commencement of annuity
payments. The exchange of one annuity contract for another is a tax-free
transaction under Section 1035, but is reportable to the IRS.
EXCHANGE PRIVILEGE
In the prospectus we describe generally how under certain conditions we
will allow you to exchange from other fixed and/or variable contracts we issue
(other contracts) to ElitePlus Value.
INFORMATION WHICH MAY BE APPLICABLE TO ANY EXCHANGE
ElitePlus Value has certain features and charges that may be different than
the other contract you are currently in. Below are some of the key features of
ElitePlus Value that you should take into consideration in your decision to
exchange into ElitePlus Value:
- The maximum surrender charge in ElitePlus Value is 7%;
- ElitePlus Value has only a standard death benefit, there are no optional
death benefits;
- ElitePlus Value has a .70% mortality and expense charge;
10
<PAGE> 53
CALCULATION OF SURRENDER CHARGE
The surrender charge is discussed in the Prospectus under "Fees and
Charges -- Surrender Charge." Examples of calculation of the Surrender
Charge upon total and partial surrender are set forth below:
ILLUSTRATION OF SURRENDER CHARGE ON TOTAL SURRENDER
Example 1.
<TABLE>
<CAPTION>
DATE TRANSACTIONS AMOUNT
---- ------------ ------
<S> <C> <C>
2/1/95.......................... Purchase Payment $10,000
2/1/96.......................... Purchase Payment 5,000
2/1/97.......................... Purchase Payment 15,000
2/1/98.......................... Purchase Payment 2,000
2/1/99.......................... Purchase Payment 3,000
2/1/00.......................... Purchase Payment 4,000
7/1/00.......................... Total Purchase Payment 39,000
(Assumes Account Value is $50,000)
</TABLE>
Assume the Account Value at the time of full withdrawal is $50,000
(7/1/00), and the Account Value on the previous anniversary (2/1/00) was
$45,000. 10% of $45,000 ($4,500) is not subject to Surrender Charge.
The total Surrender Charge is:
<TABLE>
<S> <C>
(10,000 - 4,500) X 2% + 5,000 X 4% + 15,000 X 5% + 2,000 X 5% + 3,000 X 7% + 4,000 = $1,650.
</TABLE>
ILLUSTRATION OF SURRENDER CHARGE ON A 10% PARTIAL SURRENDER FOLLOWED BY A FULL
SURRENDER
Example 2. Assumes No Interest Earned.
<TABLE>
<CAPTION>
DATE TRANSACTIONS AMOUNT
---- ------------ ------
<S> <C> <C>
2/1/95.......................... Purchase Payment $10,000
2/1/96.......................... Purchase Payment 5,000
2/1/97.......................... Purchase Payment 15,000
2/1/98.......................... Purchase Payment 2,000
2/1/99.......................... Purchase Payment 3,000
2/1/00.......................... Purchase Payment 4,000
7/1/00.......................... 10% Partial Surrender 3,900
(Assumes Account Value is $39,000)
8/1/00.......................... Full Surrender
</TABLE>
a. Since this is the first partial surrender in this participant year, calculate
free withdrawal amount (10% of the value as of 2/1/97)
10% X 39,000 = $3,900 (no charge on this 10% withdrawal)
b. The Account Value upon which Surrender Charge on the Full Surrender may be
calculated is 39,000 - 3,900 = $35,100
c. The Surrender Charge is
<TABLE>
<S> <C>
(10,000 - 3,900) X 2% + 5,000 X 4% + 15,000 X 5% + 2,000 X 5% + 3,000 X 7% + 4,000 X 7% = $1662.
</TABLE>
d. Assume that the $30 policy fee does not apply.
11
<PAGE> 54
PURCHASE UNIT VALUE
The calculation of Purchase Unit value is discussed in the Prospectus under
"Purchase Period." The following illustrations show a calculation of a new Unit
value and the purchase of Purchase Units (using hypothetical examples):
ILLUSTRATION OF CALCULATION OF PURCHASE UNIT VALUE
Example 3.
<TABLE>
<S> <C>
1. Purchase Unit value, beginning of period................ $ 1.800000
2. Value of Fund share, beginning of period................ $ 21.200000
3. Change in value of Fund share........................... $ .500000
4. Gross investment return (3)/(2)......................... .023585
5. Daily separate account fee*............................. .000025
-----------
*Mortality and expense risk fee and
administration and distribution
fee of 0.90% per annum used for
illustrative purposes.
6. Net investment return (4)-(5)........................... .023560
-----------
7. Net investment factor 1.000000+(6)...................... 1.023560
-----------
8. Purchase Unit value, end of period (1)X(7).............. 1.842408
-----------
</TABLE>
ILLUSTRATION OF PURCHASE OF PURCHASE UNITS (ASSUMING NO STATE PREMIUM TAX)
Example 4.
<TABLE>
<S> <C>
1. First Periodic Purchase Payment.......................... $ 100.00
2. Purchase Unit value on effective date of purchase (see
Example 3)............................................... $1.800000
3. Number of Purchase Units purchased (1)/(2)............... 55.556
4. Purchase Unit value for valuation date following purchase
(see Example 3).......................................... $1.842408
---------
5. Value of Purchase Units in account for valuation date
following purchase (3)X(4)............................... $ 102.36
---------
</TABLE>
PERFORMANCE CALCULATIONS
ILLUSTRATION OF CALCULATION OF CURRENT YIELD FOR MONEY MARKET DIVISION
The current yield quotation based on a seven day period is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one Purchase Unit at the
beginning of the period, subtracting a hypothetical charge reflecting deductions
from Contract Owner accounts, and dividing the difference by the value of the
account at the beginning of the base period to obtain the base period return and
then multiplying the base period return by 365/7. The 7-day Current Yield for
the AGSPC Money Market Division Twenty-Six will be shown when it becomes
available.
12
<PAGE> 55
ILLUSTRATION OF CALCULATION OF EFFECTIVE YIELD FOR MONEY MARKET DIVISION
An effective yield quotation above is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one Purchase Unit at the beginning of
the period, subtracting a hypothetical charge reflecting deductions from
Contract Owner accounts, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ] -1
STANDARDIZED YIELD FOR BOND FUND DIVISIONS
ILLUSTRATION OF CALCULATION OF STANDARDIZED YIELD FOR BOND FUND DIVISIONS
The standardized yield quotation based on a 30-day period is computed by
dividing the net investment income per Purchase Unit earned during the period by
the maximum offering price per Unit on the last day of the period, according to
the following formula:
6
YIELD = 2 [( a - b + 1) - 1]
cd
Where:
<TABLE>
<S> <C> <C>
a = net investment income earned during the period by the Fund
attributable to shares owned by the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Purchase Units outstanding
during the period
d = the maximum offering price per Purchase Unit on the last day
of the period
</TABLE>
Yield on each Division is earned from dividends declared and paid by the
Fund, which are automatically reinvested in Fund shares.
13
<PAGE> 56
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for the 1, 3, 5, and 10 year periods
ended December 31, 1997, the date of the most recent balance sheet included in
this registration statement, are computed by finding the average annual
compounded rates of over the 1, 3, 5, and 10 year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
n
P (1+T) = ERV
Where:
<TABLE>
<S> <C> <C>
P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return
n = number of years
ERV = redeemable value at the end of the 1, 3, 5 or 10 year
periods of a hypothetical $1,000 Purchase Payment made at
the beginning of the 1, 3, 5, or 10 year periods (or
fractional portion thereof)
</TABLE>
The Company may advertise standardized average annual total return which,
includes the surrender charge of up to 7% of Gross Purchase Payments as well as
non-standardized average annual total returns which does not include a surrender
charge or maintenance fee.
There is no sales charge for reinvested dividends. All recurring fees have
been deducted. For fees which vary with the account size, an account size equal
to that of the median account size has been assumed. Ending redeemable value has
been determined assuming a complete redemption at the end of the 1, 3, 5 or 10
year period and deduction of all nonrecurring charges at the end of each such
period.
14
<PAGE> 57
PERFORMANCE INFORMATION
THE PERFORMANCE OF A DIVISION MAY FROM TIME TO TIME BE COMPARED WITH THE
FOLLOWING INDICES WHICH HAVE BEEN DEEMED BY THE COMPANY RELEVANT TO THE
DIVISION:
The performance of the AGSPC Government Securities Fund Division 4 may be
compared to Lehman Brothers U.S. Treasury Composite Index. The Lehman Brothers
U.S. Treasury Composite Index consists of an index of approximately 170
government Treasury securities issues with all such issues having a maturity of
greater than one year.
The performance of the AGSPC Growth & Income Fund Division 1, OCCAT Managed
Portfolio Division 3, AGSPC Stock Index Fund Division 5, AIM V.I. Capital
Appreciation Fund Division 8, Oppenheimer Capital Appreciation Fund/VA Division
10, and the Oppenheimer Main Street Growth and Income Fund/VA Division 11 may be
compared to the Standard & Poor's(R) Corporation ("S&P(R)")* Composite Stock
Price Index ("S&P 500(R) Index"). The S&P 500(R) Index is an unmanaged
capitalization-weighted index of 500 stocks designed to measure performance of
the broad domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. The S&P 500 Index represents
approximately 73% of the aggregate United States equity markets capitalization.
The performance of the AGSPC International Equities Fund Division 2 and the
Templeton International Securities Fund -- Class 2 Division 15 may be compared
to EAFE Index. The EAFE Index, which commenced in 1969, is an unmanaged stock
index consisting of more than 1,000 companies from Europe, Australia and the Far
East. The index is capitalization weighted. It is a well known measure for
international stock performance. Total returns (with income reinvested) for the
EAFE Index are published using two methods. The first method includes gross
income (income earned without subtracting foreign income taxes which may be
withheld from foreign investors). The second method includes net income (income
earned after subtracting estimated foreign taxes). The Division currently
compares its performance with the index using the second method.
The performance of the AGSPC Money Market Fund Division 6 may be compared
to Certificate of Deposit Primary Offering by New York City Banks, 30 Day Index
(Primary CD Index). The index is a money market index which reflects the average
rate paid by New York Banks on certificates of deposit of more than $100,000.
The Index for 30 days is published daily.
The performance of the Van Kampen LIT Emerging Growth Portfolio Division 7
may be compared to Russell 2000 Index(R) ("Russell 2000")** and S&P MidCap 400
Index. The Russell 2000 was developed in 1984 by the Frank Russell Trust Company
to track the stock market performance of small capitalization domestic stocks.
The Russell 2000 is market weighted and consists of approximately 2000 stocks.
Stocks included in the Russell 2000 are chosen by the Frank Russell Trust
Company on the basis of their market size. The S&P MidCap 400 Index is market
weighted and consists of 400 stocks of domestic companies having a median market
capitalization of approximately $1.37 billion. Stocks included in the S&P MidCap
400 Index are chosen on the basis of their market size, liquidity and industry
group representation. No stocks included in the S&P 500 Index are included in
the S&P MidCap 400 Index.
The performance of the AIM V.I. Diversified Income Fund Division 9 may be
compared to Lehman Aggregate Bond Index. The Lehman Brothers Aggregate Bond
Index is a market weighted index that contains individually priced U.S.
Treasury, agency, corporate, and mortgage pass-through securities rated BBB- or
better. The Wilshire 5000 Index consists of common equity securities, covering
all stocks in the U.S. for which daily pricing is available.
The performance of the Oppenheimer High Income Fund/VA Division 12 may be
compared to
---------------
* "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)" and "S&P MidCap 400(R)" are
trademarks of Standard and Poor's ("S&P"). None of the Funds are sponsored,
endorsed, sold or promoted by S&P and S&P makes no representation regarding
the advisability of investing in these Funds.
** The "Russell 2000(R) Index" and the "Russell 1000(R) Index" are
trademark/service marks of the Frank Russell Trust Company. Russell(TM) is a
trademark of the Frank Russell Trust Company.
15
<PAGE> 58
Merrill Lynch High Yield Master Index. The Merrill Lynch High Yield Master Index
is an unmanaged index of U.S. corporate and government bonds that is a measure
of the performance of the high-yield corporate bond market.
The performance of the Oppenheimer Small Cap Growth Fund/VA Division 13 may
be compared to Russell 2000 Index. (See description above.)
The performance of the Templeton Developing Markets Securities
Fund -- Class 2 Division 14 may be compared to MSCI World Index. The MSCI World
Index is an unmanaged capitalization weighted index consisting of more than 1500
issues from 22 countries as well as certain South African gold mining issues.
16
<PAGE> 59
PAYOUT PAYMENTS
ASSUMED INVESTMENT RATE
The discussion concerning the amount of payout payments which follows this
section is based on an Assumed Investment Rate of 3% per annum. The foregoing
Assumed Investment Rates are used merely in order to determine the first monthly
payment per thousand dollars of value. It should not be inferred that such rates
will bear any relationship to the actual net investment experience of A.G.
Separate Account A.
AMOUNT OF PAYOUT PAYMENTS
The amount of the first variable annuity payment to the Annuitant will
depend on the amount of the Account Value applied to effect the variable annuity
as of the tenth day immediately preceding the date payout payments commence, the
amount of any premium tax owed, the annuity option selected, and the age of the
Annuitant.
The Contracts contain tables indicating the dollar amount of the first
payout payment under each payout option for each $1,000 of Account Value (after
the deduction for any premium tax) at various ages. These tables are based upon
the Annuity 2000 Table (promulgated by the Society of Actuaries) and an Assumed
Investment Rate of 3%.
The portion of the first monthly variable payout payment derived from a
Division of A.G. Separate Account A is divided by the Payout Unit value for that
Division (calculated ten days prior to the date of the first monthly payment) to
determine the number of Payout Units in each Division represented by the
payment. The number of such units will remain fixed during the Payout Period,
assuming the Annuitant makes no transfers of Payout Units to provide Payout
Units under another Division or to provide a fixed annuity.
In any subsequent month, the dollar amount of the variable payout payment
derived from each Division is determined by multiplying the number of Payout
Units in that Division by the value of such Payout Unit on the tenth day
preceding the due date of such payment. The Payout Unit value will increase or
decrease in proportion to the net investment return of the Division or Divisions
underlying the variable payout since the date of the previous payout payment,
less an adjustment to neutralize the 3% or other Assumed Investment Rate
referred to above.
Therefore, the dollar amount of variable payout payments after the first
will vary with the amount by which the net investment return is greater or less
than 3% per annum. For example, if a Division has a cumulative net investment
return of 5% over a one year period, the first payout payment in the next year
will be approximately 2 percentage points greater than the payment on the same
date in the preceding year, and subsequent payments will continue to vary with
the investment experience of the Division. If such net investment return is 1%
over a one year period, the first payout payment in the next year will be
approximately 2 percentage points less than the payment on the same date in the
preceding year, and subsequent payments will continue to vary with the
investment experience of the applicable Division.
Each deferred Contract provides that, when fixed payout payments are to be
made under one of the first three payout options, the monthly payment to the
Annuitant will not be less than the monthly payment produced by the then current
settlement option rates, which will not be less than the rates used for a
currently issued single payment immediate annuity contract. The purpose of this
provision is to assure the Annuitant that, at retirement, if the fixed payout
purchase rates then required by the Company for new single payment immediate
annuity contracts are significantly more favorable than the annuity rates
guaranteed by a Contract, the Annuitant will be given the benefit of the new
annuity rates.
PAYOUT UNIT VALUE
The value of a Payout Unit is calculated at the same time that the value of
a Purchase Unit is calculated and is based on the same values for Fund shares
and other assets and liabilities. (See "Purchase Period" in the prospectus.) The
calculation of Payout Unit value is discussed in the prospectus under "Payout
Period."
17
<PAGE> 60
The following illustrations show, by use of hypothetical examples, the
method of determining the Payout Unit value and the amount of variable annuity
payments.
ILLUSTRATION OF CALCULATION OF PAYOUT UNIT VALUE
<TABLE>
<S> <C>
1. Payout Unit value, beginning of period.................. $ .980000
2. Net investment factor for Period (see Example 3)........ 1.023558
3. Daily adjustment for 3% Assumed Investment Rate......... .999906
4. (2)X(3)................................................. 1.023462
5. Payout Unit value, end of period (1)X(4)................ $ 1.002993
</TABLE>
ILLUSTRATION OF PAYOUT PAYMENTS
<TABLE>
<S> <C>
1. Number of Purchase Units at Payout Date................. 10,000.00
2. Purchase Unit value (see Example 3)..................... $ 1.800000
3. Account Value of Contract (1)X(2)....................... $18,000.00
4. First monthly Payout Payment per $1,000 of Account
Value................................................... $ 5.63
5. First monthly Payout Payment (3)X(4)/1,000.............. $ 101.34
6. Payout Unit value (see Example 10)...................... $ .980000
7. Number of Payout Units (5)/(6).......................... 103.408
8. Assume Payout Unit value for second month equal to...... $ .997000
9. Second monthly Payout Payment (7)X(8)................... $ 103.10
10. Assume Payout Unit value for third month equal to....... $ .953000
11. Third monthly Payout Payment (7)X(10)................... $ 98.55
</TABLE>
18
<PAGE> 61
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company has qualified or intends to qualify the Contracts for sale in
47 states and the District of Columbia and will commence offering the Contracts
promptly upon qualification in each such jurisdiction.
The Contracts are sold in a continuous offering by licensed insurance
agents who are registered representatives of broker-dealers which are members of
the National Association of Securities Dealers, Inc. (the "NASD"). The principal
underwriter for A.G. Separate Account A is American General Distributors, Inc.
("Distributor"). Distributor was formerly known as A.G. Distributors, Inc. In
the States of Florida and Illinois, the Distributor is known as American General
Financial Distributors of Florida, Inc. and American General Financial
Distributors of Illinois, Inc., respectively. Distributor's address is 2929
Allen Parkway, Houston, Texas 77019. Distributor is a Delaware corporation
organized in 1994 and is a member of the NASD.
The licensed agents who sell the Contracts will be compensated for such
sales by commissions ranging up to 5 1/2% of each Purchase Payment. The Company
may from time to time pay a trail commission to the licensed agents who sell the
Contracts. (These various commissions are paid by the Company and do not result
in any charge to Contract Owners or to A.G. Separate Account A in addition to
the charges described under "Fees and Charges" in the prospectus.)
Pursuant to its underwriting agreement with Distributor and A.G. Separate
Account A, the Company reimburses Distributor for reasonable sales expenses,
including overhead expenses.
EXPERTS
The balance sheets of the Company as of December 31, 1999 and 1998 and the
related statements of operations, shareholder's equity, comprehensive income,
and cash flows for the year ended December 31, 1999, the ten months ended
December 31, 1998, the two months ended February 28, 1998, and the year ended
December 31, 1997 and the statements of net assets of the Separate Account as of
December 31, 1999, and the related statements of operations for the year then
ended, and the statements of changes in net assets for each of the periods
reported, all of which are included in this Statement of Additional Information,
have been included herein in reliance on such reports of Ernst & Young LLP,
independent auditors, given on the authority of such firm as experts in
accounting and auditing.
COMMENTS ON FINANCIAL STATEMENTS
The financial statements of American General Annuity Insurance Company
should be considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts, which include death benefits, and its
assumption of the mortality and expense risks.
The Separate Account financial statements contained herein reflect the
composition of the Separate Account as of December 31, 1999, and for the fiscal
year then ended.
19
<PAGE> 62
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
PRINTED IN U.S.A. 8/00
Recycled Paper --RECYCLED PAPER LOGO--
<PAGE> 63
================================================================================
TABLE OF CONTENTS
================================================================================
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
A.G. SEPARATE ACCOUNT A - ANNUAL REPORT
DECEMBER 31, 1999
<TABLE>
<S> <C>
Report of Independent Auditors ........................... 1
Summary of Financial Statements .......................... 3
Statements of Net Assets ................................. 4
Statements of Operations ................................. 6
Statements of Changes in Net Assets ......................10
Notes to Financial Statements ............................22
</TABLE>
<PAGE> 64
================================================================================
REPORT OF INDEPENDENT AUDITORS 1
================================================================================
TO THE BOARD OF DIRECTORS OF AMERICAN GENERAL ANNUITY INSURANCE COMPANY
AND CONTRACT OWNERS OF AMERICAN GENERAL ANNUITY INSURANCE COMPANY -
A.G. SEPARATE ACCOUNT A
We have audited the accompanying statements of net assets of A.G. Separate
Account A (formerly AGA Separate Account A) (comprising, respectively,
Oppenheimer Main Street Growth & Income Fund/VA, Oppenheimer Capital
Appreciation Fund/VA, Oppenheimer Small Cap Growth Fund/VA, Oppenheimer High
Income Fund/VA, Templeton Developing Markets Fund-Class 2, Templeton
International Fund-Class 2, Franklin Small Cap Investments Fund-Class 2, AIM
V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM V.I. Value
Fund, AIM V.I. International Equity Fund, Van Kampen Life Investment Trust
Emerging Growth Portfolio, Van Kampen Life Investment Trust Enterprise
Portfolio, AGSPC Stock Index Fund, AGSPC Growth & Income Fund, AGSPC
International Equities Fund, AGSPC Government Securities Fund, AGSPC Money
Market Fund, One Group Investment Trust Diversified Equity Portfolio, One Group
Investment Trust Equity Index Portfolio, One Group Investment Trust Large Cap
Growth Portfolio, One Group Investment Trust Mid Cap Value Portfolio, One Group
Investment Trust Mid Cap Growth Portfolio, One Group Investment Trust
Diversified Mid Cap Portfolio, One Group Investment Trust Government Bond
Portfolio, One Group Investment Trust Bond Portfolio, One Group Investment Trust
Balanced Portfolio, OCCAT Managed Portfolio, State Street Global Advisors Money
Market Portfolio, State Street Global Advisors Growth Equity Portfolio, Credit
Suisse Growth and Income Portfolio, Credit Suisse International Portfolio, Van
Kampen Emerging Growth Portfolio, American General U.S. Government Securities
Portfolio and EliteValue Portfolio) ("Separate Account") as of December 31,
1999, and the related statement of operations for the year then ended and the
statements of changes in net assets for each of the periods indicated therein.
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 audit.
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 custodians. 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 each of the portfolios
constituting A.G. Separate Account A at December 31,1999, the results of their
operations and changes in their net assets for each of the periods referred to
above, in conformity with accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP
Houston, Texas
February 18, 2000
<PAGE> 65
================================================================================
2 FINANCIAL STATEMENTS
================================================================================
[INTENTIONALLY LEFT BLANK]
<PAGE> 66
================================================================================
SUMMARY OF FINANCIAL STATEMENTS 3
================================================================================
STATEMENT OF NET ASSETS
December 31, 1999
<TABLE>
<CAPTION>
ASSETS: ALL PORTFOLIOS
--------------
<S> <C>
Total investment in shares of mutual funds, at market (cost $180,479,678) .................. $ 188,224,760
--------------
NET ASSETS ................................................................................. $ 188,224,760
==============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with right of reinvestment) ..... $ 188,224,760
--------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ......................................... $ 188,224,760
==============
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
INVESTMENT INCOME: ALL PORTFOLIOS
--------------
Dividends from mutual funds ................................................................ $ 2,477,548
--------------
EXPENSES:
Mortality and expense risk, administrative fees and maintenance charges .................... 1,828,539
--------------
NET INVESTMENT INCOME ...................................................................... 649,009
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ........................................................... 27,843,075
Capital gains distributions from mutual funds .............................................. 442,717
Net unrealized appreciation of investments during the year ................................. 74,258
--------------
Net realized and unrealized gain on investments ......................................... 28,360,050
--------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................... $ 29,009,059
==============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS ALL PORTFOLIOS
--------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................................................... $ 649,009 $ 538,830
Net realized gain on investments ........................................................... 27,843,075 764,639
Capital gains distributions from mutual funds .............................................. 442,717 988,454
Net unrealized appreciation of investments during the year ................................. 74,258 4,902,798
-------------- --------------
Increase in net assets resulting from operations ........................................ 29,009,059 7,194,721
-------------- --------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................................. 31,465,485 33,707,545
Death benefit payments ..................................................................... (1,368,376) (530,830)
Surrenders of accumulation units by terminations and withdrawals ........................... (11,255,790) (2,763,965)
Amounts transferred from AGAIC general account ............................................. 69,003,716 7,888,508
-------------- --------------
Increase in net assets resulting from principal transactions ............................ 87,845,035 38,301,258
Return of capital to the Company (Note A) .................................................. (17,206,028) --
-------------- --------------
Increase in net assets from principal transactions
and return of capital to the Company ................................................... 70,639,007 38,301,258
-------------- --------------
TOTAL INCREASE IN NET ASSETS ............................................................... 99,648,066 45,495,979
NET ASSETS:
Beginning of year .......................................................................... 88,576,694 43,080,715
-------------- --------------
End of year ................................................................................ $ 188,224,760 $ 88,576,694
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 67
================================================================================
4 FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
OPPENHEIMER
MAIN STREET OPPENHEIMER OPPENHEIMER
GROWTH CAPITAL SMALL CAP OPPENHEIMER
& INCOME APPRECIATION GROWTH HIGH INCOME
FUND/VA FUND/VA FUND/VA FUND/VA
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............. $8,620,275 $5,596,592 $1,885,865 $2,204,492
---------- ---------- ---------- ----------
NET ASSETS .................................................. $8,620,275 $5,596,592 $1,885,865 $2,204,492
========== ========== ========== ==========
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals
with right of reinvestment) .............................. $8,620,275 $5,596,592 $1,885,865 $2,204,492
---------- ---------- ---------- ----------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES .......... $8,620,275 $5,596,592 $1,885,865 $2,204,492
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
VAN KAMPEN VAN KAMPEN
LIFE INVESTMENT LIFE INVESTMENT AGSPC
TRUST TRUST AGSPC GROWTH
EMERGING GROWTH ENTERPRISE STOCK INDEX & INCOME
PORTFOLIO PORTFOLIO FUND FUND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............... $ 34,716,123 $ 193,310 $ 23,052,112 $ 28,354,343
-------------- -------------- -------------- --------------
NET ASSETS .................................................... $ 34,716,123 $ 193,310 $ 23,052,112 $ 28,354,343
============== ============== ============== ==============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with
right of reinvestment) ..................................... $ 34,716,123 $ 193,310 $ 23,052,112 $ 28,354,343
-------------- -------------- -------------- --------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ............ $ 34,716,123 $ 193,310 $ 23,052,112 $ 28,354,343
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP ONE GROUP ONE GROUP
INVESTMENT TRUST INVESTMENT TRUST INVESTMENT TRUST ONE GROUP
MID CAP DIVERSIFIED GOVERNMENT INVESTMENT TRUST
GROWTH MID CAP BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............ $ 792,425 $ 199,503 $ 1,012,813 $ 1,032,951
--------------- --------------- --------------- ---------------
NET ASSETS ................................................. $ 792,425 $ 199,503 $ 1,012,813 $ 1,032,951
=============== =============== =============== ===============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with
right of reinvestment) ................................... $ 792,425 $ 199,503 $ 1,012,813 $ 1,032,951
--------------- --------------- --------------- ---------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ......... $ 792,495 $ 199,503 $ 1,012,813 $ 1,032,951
=============== =============== =============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 68
================================================================================
A.G. SEPARATE ACCOUNT A 5
================================================================================
<TABLE>
<CAPTION>
TEMPLETON FRANKLIN AIM V.I.
DEVELOPING TEMPLETON SMALL CAP CAPITAL
MARKETS INTERNATIONAL INVESTMENTS APPRECIATION
FUND-CLASS 2 FUND-CLASS 2 FUND-CLASS 2 FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............. $ 855,024 $ 1,267,000 $ 210,387 $ 5,083,571
------------- ------------- ------------- -------------
NET ASSETS .................................................. $ 855,024 $ 1,267,000 $ 210,387 $ 5,083,571
============= ============= ============= =============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals
with right of reinvestment) .............................. $ 855,024 $ 1,267,000 $ 210,387 $ 5,083,571
------------- ------------- ------------- -------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES .......... $ 855,024 $ 1,267,000 $ 210,387 $ 5,083,571
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
AIM V.I. AIM V.I.
DIVERSIFIED AIM V.I. INTERNATIONAL
INCOME VALUE EQUITY
FUND FUND FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............. $ 1,692,397 $ 2,055,238 $ 743,829
--------------- --------------- ---------------
NET ASSETS .................................................. $ 1,692,397 $ 2,055,238 $ 743,829
=============== =============== ===============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals
with right of reinvestment) .............................. $ 1,692,397 $ 2,055,238 $ 743,829
--------------- --------------- ---------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES .......... $ 1,692,397 $ 2,055,238 $ 743,829
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP
AGSPC AGSPC AGSPC INVESTMENT TRUST
INTERNATIONAL GOVERNMENT MONEY DIVERSIFIED
EQUITIES SECURITIES MARKET EQUITY
FUND FUND FUND PORTFOLIO
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............... $ 6,822,177 $ 18,525,907 $ 5,315,018 $ 908,894
-------------- -------------- -------------- --------------
NET ASSETS .................................................... $ 6,822,177 $ 18,525,907 $ 5,315,018 $ 908,894
============== ============== ============== ==============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with
right of reinvestment) ..................................... $ 6,822,177 $ 18,525,907 $ 5,315,018 $ 908,894
-------------- -------------- -------------- --------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ............ $ 6,822,177 $ 18,525,907 $ 5,315,018 $ 908,894
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP ONE GROUP
ONE GROUP INVESTMENT TRUST INVESTMENT TRUST
INVESTMENT TRUST LARGE CAP MID CAP
EQUITY INDEX GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------
<S> <C> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............... $ 726,353 $ 1,969,624 $ 891,172
--------------- --------------- ---------------
NET ASSETS .................................................... $ 726,353 $ 1,969,624 $ 891,172
=============== =============== ===============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with
right of reinvestment) ..................................... $ 726,353 $ 1,969,624 $ 891,172
--------------- --------------- ---------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ............ $ 726,353 $ 1,969,624 $ 891,172
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP
INVESTMENT TRUST OCCAT
BALANCED MANAGED
PORTFOLIO PORTFOLIO
---------------- ---------------
<S> <C> <C>
STATEMENTS OF NET ASSETS
December 31, 1999
ASSETS:
Investment in shares of mutual funds, at market ............... $ 632,185 $ 32,865,180
--------------- ---------------
NET ASSETS .................................................... $ 632,185 $ 32,865,180
=============== ===============
NET ASSETS ATTRIBUTABLE TO:
Contract owners - reserves for redeemable annuity contracts
(net of applicable contract loans - partial withdrawals with
right of reinvestment) ..................................... $ 632,185 $ 32,865,180
--------------- ---------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNER RESERVES ............ $ 632,185 $ 32,865,180
=============== ===============
</TABLE>
<PAGE> 69
================================================================================
6 FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS OPPENHEIMER
For the Year Ended December 31, 1999 MAIN STREET OPPENHEIMER OPPENHEIMER
GROWTH CAPITAL SMALL CAP OPPENHEIMER
& INCOME APPRECIATION GROWTH HIGH INCOME
FUND/VA FUND/VA FUND/VA FUND/VA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 18,207 $ 37,389 $ -- $ 28,967
------------ ------------ ------------ ------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges.................................................. 57,640 34,539 9,919 15,249
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) .......................................... (39,433) 2,850 (9,919) 13,718
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... 44,783 23,215 (5,447) (9,875)
Capital gains distributions from mutual funds ......................... -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the year ...................................... 801,930 1,131,820 583,463 1,197
------------ ------------ ------------ ------------
Net realized and unrealized gain (loss) on investments ........... 846,713 1,155,035 578,016 (8,678)
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 807,280 $ 1,157,885 $ 568,097 $ 5,040
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS VAN KAMPEN
For the Year Ended December 31, 1999 LIFE INVESTMENT VAN KAMPEN AGSPC
TRUST LIFE INVESTMENT AGSPC GROWTH
EMERGING GROWTH TRUST ENTERPRISE STOCK INDEX & INCOME
PORTFOLIO(1) PORTFOLIO(1) FUND(2) FUND(2)
--------------- ---------------- ----------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ -- $ -- $ 16,704 $ 14,154
--------------- ---------------- ----------- --------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges.................................................. 12,905 206 8,064 10,032
--------------- ---------------- ----------- --------
NET INVESTMENT INCOME (LOSS) .......................................... (12,905) (206) 8,640 4,122
--------------- ---------------- ----------- --------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... 4,223 28 308 833
Capital gains distributions from mutual funds ......................... -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the year ...................................... 1,835,647 18,079 500,872 640,445
--------------- ---------------- ----------- --------
Net realized and unrealized gain (loss) on investments ........... 1,839,870 18,107 501,180 641,278
--------------- ---------------- ----------- --------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 1,826,965 $ 17,901 $ 509,820 $645,400
=============== ================ =========== ========
</TABLE>
(1) Since inception August 2, 1999.
(2) Since inception December 23, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 70
================================================================================
A.G. SEPARATE ACCOUNT A 7
================================================================================
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS TEMPLETON FRANKLIN AIM V.I.
For the Year Ended December 31, 1999 DEVELOPING TEMPLETON SMALL CAP CAPITAL
MARKETS INTERNATIONAL INVESTMENTS APPRECIATION
FUND-CLASS 2 FUND-CLASS 2 FUND-CLASS 2(1) FUND
------------ ------------- --------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 1,772 $ 14,724 $ -- $ 3,172
------------ ------------- --------------- ------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges.................................................. 4,875 7,701 283 31,862
------------ ------------- --------------- ------------
NET INVESTMENT INCOME (LOSS) .......................................... (3,103) 7,023 (283) (28,690)
------------ ------------- --------------- ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... 51,306 6,205 65 32,398
Capital gains distributions from mutual funds ......................... -- -- -- 98,961
Net unrealized appreciation (depreciation)
of investments during the year ...................................... 114,363 140,995 34,263 1,183,393
------------ ------------- --------------- ------------
Net realized and unrealized gain (loss) on investments ........... 165,669 147,200 34,328 1,314,752
------------ ------------- --------------- ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 162,566 $ 154,223 $ 34,045 $ 1,286,062
============ ============= =============== ============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS AIM V.I. AIM V.I.
For the Year Ended December 31, 1999 DIVERSIFIED AIM V.I. INTERNATIONAL
INCOME VALUE EQUITY
FUND FUND(1) FUND(1)
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 105,904 $ 3,676 $ 3,623
------------- ------------- -------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges.................................................. 12,948 2,816 1,002
------------- ------------- -------------
Net Investment Income (Loss) .......................................... 92,956 860 2,621
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... (8,132) 1,612 350
Capital gains distributions from mutual funds ......................... -- 19,222 15,207
Net unrealized appreciation (depreciation)
of investments during the year ...................................... (111,467) 149,337 121,689
------------- ------------- -------------
Net realized and unrealized gain (loss) on investments ........... (119,599) 170,171 137,246
------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ (26,643) $ 171,031 $ 139,867
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS ONE GROUP
For the Year Ended December 31, 1999 AGSPC AGSPC AGSPC INVESTMENT TRUST
INTERNATIONAL GOVERNMENT MONEY DIVERSIFIED
EQUITIES SECURITIES MARKET EQUITY
FUND(2) FUND(2) FUND(1) PORTFOLIO(1)
------------- ---------- ------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 1,502 $ 81,701 $16,634 $ 74,582
------------- ---------- ------- ----------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges.................................................. 2,361 6,704 3,771 1,385
------------- ---------- ------- ----------------
NET INVESTMENT INCOME (LOSS) .......................................... (859) 74,997 12,863 73,197
------------- ---------- ------- ----------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... 852 283 -- 580
Capital gains distributions from mutual funds ......................... -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the year ...................................... 251,966 (77,673) -- (29,058)
------------- ---------- ------- ----------------
Net realized and unrealized gain (loss) on investments ........... 252,818 (77,390) -- (28,478)
------------- ---------- ------- ----------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 251,959 $ (2,393) $12,863 $ 44,719
============= ========== ======= ================
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS ONE GROUP ONE GROUP
For the Year Ended December 31, 1999 ONE GROUP INVESTMENT TRUST INVESTMENT TRUST
INVESTMENT TRUST LARGE CAP MID CAP
EQUITY INDEX GROWTH VALUE
PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1)
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 11,864 $ 171,655 $ 2,053
---------------- ---------------- ----------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges ................................................. 892 2,858 1,404
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS) .......................................... 10,972 168,797 649
---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... -- 1,353 (132)
Capital gains distributions from mutual funds ......................... -- -- --
Net unrealized appreciation (depreciation)
of investments during the year ...................................... 32,276 1,280 38,683
---------------- ---------------- ----------------
Net realized and unrealized gain (loss) on investments ........... 32,276 2,633 38,551
---------------- ---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 43,248 $ 171,430 $ 39,200
================ ================ ================
</TABLE>
<PAGE> 71
================================================================================
8 FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS ONE GROUP ONE GROUP ONE GROUP
FOR THE YEAR ENDED DECEMBER 31, 1999 INVESTMENT TRUST INVESTMENT TRUST INVESTMENT TRUST ONE GROUP
MID CAP DIVERSIFIED GOVERNMENT INVESTMENT TRUST
GROWTH MID CAP BOND BOND
PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1) PORTFOLIO(1)
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................... $ 86,631 $ 12,754 $ 13,640 $ 14,811
---------------- ---------------- ---------------- ----------------
EXPENSES:
Mortality and expense risk, administrative fees
and maintenance charges ..................... 962 360 1,616 1,616
---------------- ---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS) .................. 85,669 12,394 12,024 13,195
---------------- ---------------- ---------------- ----------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ....... 1,401 344 (142) (285)
Capital gains distributions from mutual funds.. -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the year .............. (3,111) 2,453 (15,597) (18,922)
---------------- ---------------- ---------------- ----------------
Net realized and unrealized gain (loss) on
investments ............................ (1,710) 2,797 (15,739) (19,207)
---------------- ---------------- ---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................... $ 83,959 $ 15,191 $ (3,715) $ (6,012)
================ ================ ================ ================
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS AMERICAN
For the Year Ended December 31, 1999 GENERAL
U.S. GOVERNMENT
SECURITIES ELITEVALUE
PORTFOLIO PORTFOLIO
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ........................................... $ 575,489 $ 294,485
--------------- ---------------
EXPENSES:
Mortality and expense risk, administrative fees and
maintenance charges .................................................. 197,849 401,903
--------------- ---------------
NET INVESTMENT INCOME (LOSS) .......................................... 377,640 (107,418)
--------------- ---------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ............................... (410,976) 1,534,081
Capital gains distributions from mutual funds ......................... 4,086 23,975
Net unrealized appreciation (depreciation)
of investments during the year ...................................... (36,492) (810,829)
--------------- ---------------
Net realized and unrealized gain (loss) on investments ........... (443,382) 747,227
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ (65,742) $ 639,809
=============== ===============
</TABLE>
(1) Since inception August 2, 1999.
(2) Since inception December 23, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 72
================================================================================
A.G. SEPARATE ACCOUNT A 9
================================================================================
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS ONE GROUP STATE STREET STATE STREET
For the Year Ended December 31, 1999 INVESTMENT TRUST OCCAT GLOBAL ADVISORS GLOBAL ADVISORS
BALANCED MANAGED MONEY MARKET GROWTH EQUITY
PORTFOLIO(1) PORTFOLIO(2) PORTFOLIO PORTFOLIO
---------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................... $ 13,598 $ -- $ 257,370 $ 95,244
---------------- ------------ --------------- ---------------
EXPENSES:
Mortality and expense risk, administrative fees
and maintenance charges ..................... 880 11,603 79,910 256,376
---------------- ------------ --------------- ---------------
NET INVESTMENT INCOME (LOSS) .................. 12,718 (11,603) 177,460 (161,132)
---------------- ------------ --------------- ---------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ....... -- 927 -- 4,438,936
Capital gains distributions from mutual funds.. -- -- -- 207,995
Net unrealized appreciation (depreciation)
of investments during the year .............. 5,152 406,465 -- (2,520,628)
---------------- ------------ --------------- ---------------
Net realized and unrealized gain (loss) on
investments ............................ 5,152 407,392 -- 2,126,303
---------------- ------------ --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................... $ 17,870 $ 395,789 $ 177,460 $ 1,965,171
================ ============ =============== ===============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS CREDIT SUISSE CREDIT SUISSE
For the Year Ended December 31, 1999 GROWTH AND INTERNATIONAL VAN KAMPEN
INCOME EQUITY EMERGING GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................... $ 401,690 $ 103,553 $ --
------------- ------------- ---------------
EXPENSES:
Mortality and expense risk, administrative fees
and maintenance charges ..................... 313,698 70,042 262,308
------------- ------------- ---------------
NET INVESTMENT INCOME (LOSS) .................. 87,992 33,511 (262,308)
------------- ------------- ---------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ....... 3,398,132 1,264,725 17,471,124
Capital gains distributions from mutual funds.. 73,271 -- --
Net unrealized appreciation (depreciation)
of investments during the year .............. (1,413,027) 181,673 (3,066,379)
------------- ------------- ---------------
Net realized and unrealized gain (loss) on
investments ............................ 2,058,376 1,446,398 14,404,745
------------- ------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................... $ 2,146,368 $ 1,479,909 $ 14,142,437
============= ============= ===============
</TABLE>
<PAGE> 73
================================================================================
10 FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
OPPENHEIMER MAIN STREET OPPENHEIMER
GROWTH & INCOME CAPITAL APPRECIATION
FUND/VA FUND/VA
------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............................................... $ (39,433) $(16 ) $ 2,850 $ (5)
Net realized gain (loss) on investments .................................... 44,783 40 23,215 --
Capital gains distributions from mutual funds .............................. -- -- -- --
Net unrealized appreciation (depreciation) of investments during the year .. 801,930 2,584 1,131,820 542
------------ ------------ ------------ -----------
Increase (decrease) in net assets resulting from operations .............. 807,280 2,608 1,157,885 537
------------ ------------ ------------ -----------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................. 891,765 6,577 389,683 4,809
Death benefit payments ..................................................... (23,048) -- -- --
Surrenders of accumulation units by terminations and withdrawals ........... (141,126) -- (103,628) --
Amounts transferred from (to) AGAIC general account ........................ 3,036,236 8,191 1,667,651 5,940
Inter-portfolio transfers .................................................. 3,970,976 60,816 2,465,063 8,652
------------ ------------ ------------ -----------
Increase (decrease) in net assets resulting from principal transactions .. 7,734,803 75,584 4,418,769 19,401
Return of capital to the Company (Note A) .................................. -- -- -- --
------------ ------------ ------------ -----------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company ................................. 7,734,803 75,584 4,418,769 19,401
------------ ------------ ------------ -----------
TOTAL INCREASE IN NET ASSETS ............................................... 8,542,083 78,192 5,576,654 19,938
NET ASSETS:
Beginning of year .......................................................... 78,192 -- 19,938 --
------------ ------------ ------------ -----------
End of year ................................................................ $ 8,620,275 $ 78,192 $ 5,596,592 $ 19,938
============ ============ ============ ===========
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit .................................... 562,531.880 6,629.025 318,641.590 1,662.071
ElitePlus Bonus Enhanced benefit unit .................................... 30,779.703 792.916 22,670.387 --
ElitePlus Bonus Annual Step Up benefit unit .............................. 97,957.267 -- 38,283.382 218.755
One Multi-Manager Standard benefit unit .................................. -- -- -- --
------------ ------------ ------------ -----------
Accumulation units end of year ............................................. 691,268.850 7,421.941 379,595.359 1,880.826
============ ============ ============ ===========
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit .................................... $ 12.598916 $ 10.498635 $ 14.772926 $ 10.576647
ElitePlus Bonus Enhanced benefit unit .................................... 13.001536 10.840562 13.811947 10.000000
ElitePlus Bonus Annual Step Up benefit unit .............................. 11.564221 10.000000 15.050945 10.785446
One Multi-Manager Standard benefit unit .................................. -- -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 74
================================================================================
A.G. SEPARATE ACCOUNT A 11
================================================================================
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER
SMALL CAP GROWTH HIGH INCOME
FUND/VA FUND/VA
---------------------------- ------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................................. $ (9,919) $ (7) $ 13,718
Net realized gain (loss) on investments ....................................... (5,447) -- (9,875)
Capital gains distributions from mutual funds ................................. -- -- --
Net unrealized appreciation (depreciation) of investments during the year ..... 583,463 1,509 1,197
------------ ------------ ------------
Increase (decrease) in net assets resulting from operations ................. 568,097 1,502 5,040
------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments .................................................... 69,200 11,377 347,825
Death benefit payments ........................................................ (8,786) -- --
Surrenders of accumulation units by terminations and withdrawals .............. (11,943) (250) (53,762)
Amounts transferred from (to) AGAIC general account ........................... 399,323 2,532 1,028,113
Inter-portfolio transfers ..................................................... 836,836 17,977 859,115
------------ ------------ ------------
Increase (decrease) in net assets resulting from principal transactions ..... 1,284,630 31,636 2,181,291
Return of capital to the Company (Note A) ..................................... -- -- --
------------ ------------ ------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 1,284,630 31,636 2,181,291
------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS .................................................. 1,852,727 33,138 2,186,331
33,138 -- 18,161
NET ASSETS: ------------ ------------ ------------
Beginning of year ............................................................. $ 1,885,865 $ 33,138 $ 2,204,492
============ ============ ============
End of year ...................................................................
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ....................................... 94,772.287 2,972.732 125,894.163
ElitePlus Bonus Enhanced benefit unit ....................................... 9,065.761 4.463 12,015.075
ElitePlus Bonus Annual Step Up benefit unit ................................. 14,851.701 -- 33,529.480
One Multi-Manager Standard benefit unit ..................................... -- -- 44,465.113
------------ ------------ ------------
Accumulation units end of year ................................................ 118,689.749 2,977.195 215,903.831
============ ============ ============
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999
ACCUMULATION VALUE PER UNIT: ------------ ------------ ------------
ElitePlus Bonus Standard benefit unit ....................................... $ 16.084962 $ 11.130512 $ 10.295545
ElitePlus Bonus Enhanced benefit unit ....................................... 16.074463 11.129835 10.288808
ElitePlus Bonus Annual Step Up benefit unit ................................. 14.525577 10.000000 10.193421
One Multi-Manager Standard benefit unit ..................................... -- -- 9.961553
<CAPTION>
OPPENHEIMER TEMPLETON
HIGH INCOME DEVELOPING MARKETS
FUND/VA FUND-CLASS 2
------------- ----------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................................. $ (7) $ (3,103) $ --
Net realized gain (loss) on investments ....................................... -- 51,306 52
Capital gains distributions from mutual funds ................................. -- -- --
Net unrealized appreciation (depreciation) of investments during the year ..... 31 114,363 --
------------ ------------ -----------
Increase (decrease) in net assets resulting from operations ................. 24 162,566 52
------------ ------------ -----------
PRINCIPAL TRANSACTIONS:
Contract purchase payments .................................................... 11,269 105,911 --
Death benefit payments ........................................................ -- (12,475) --
Surrenders of accumulation units by terminations and withdrawals .............. (250) (7,946) --
Amounts transferred from (to) AGAIC general account ........................... 2,501 268,279 (52)
Inter-portfolio transfers ..................................................... 4,617 338,689 --
------------ ------------ -----------
Increase (decrease) in net assets resulting from principal transactions ..... 18,137 692,458 (52)
Return of capital to the Company (Note A) ..................................... -- -- --
------------ ------------ -----------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 18,137 692,458 (52)
------------ ------------ -----------
TOTAL INCREASE IN NET ASSETS .................................................. 18,161 855,024 --
-- -- --
NET ASSETS: ------------ ------------ -----------
Beginning of year ............................................................. $ 18,161 $ 855,024 $ --
============ ============ ===========
End of year ...................................................................
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ....................................... 1,791.585 46,149.782 --
ElitePlus Bonus Enhanced benefit unit ....................................... 22.316 905.798 --
ElitePlus Bonus Annual Step Up benefit unit ................................. -- 5,121.446 --
One Multi-Manager Standard benefit unit ..................................... -- 6,718.780 --
------------ ------------ -----------
Accumulation units end of year ................................................ 1,813.901 58,895.806 --
============ ============ ===========
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1999 1999
ACCUMULATION VALUE PER UNIT: ------------ ------------ -------------
ElitePlus Bonus Standard benefit unit ....................................... $ 10.012380 $ 15.200206 $ 10.095498
ElitePlus Bonus Enhanced benefit unit ....................................... 10.011761 14.970651 10.000000
ElitePlus Bonus Annual Step Up benefit unit ................................. 10.000000 12.043240 10.000000
One Multi-Manager Standard benefit unit ..................................... -- 11.653718 --
<CAPTION>
TEMPLETON
INTERNATIONAL
FUND-CLASS 2
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) .................................................. $ 7,023 $ (1)
Net realized gain (loss) on investments ....................................... 6,205 --
Capital gains distributions from mutual funds ................................. -- --
Net unrealized appreciation (depreciation) of investments during the year ..... 140,995 22
------------ ------------
Increase (decrease) in net assets resulting from operations ................. 154,223 21
------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments .................................................... 114,387 --
Death benefit payments ........................................................ -- --
Surrenders of accumulation units by terminations and withdrawals .............. (8,983) --
Amounts transferred from (to) AGAIC general account ........................... 389,400 3,642
Inter-portfolio transfers ..................................................... 614,310 --
------------ ------------
Increase (decrease) in net assets resulting from principal transactions ..... 1,109,114 3,642
Return of capital to the Company (Note A) ..................................... -- --
------------ ------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 1,109,114 3,642
------------ ------------
TOTAL INCREASE IN NET ASSETS .................................................. 1,263,337 3,663
3,663 --
NET ASSETS: ------------ ------------
Beginning of year ............................................................. $ 1,267,000 $ 3,663
============ ============
End of year ...................................................................
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ....................................... 88,398.245 359.871
ElitePlus Bonus Enhanced benefit unit ....................................... 4,792.566 --
ElitePlus Bonus Annual Step Up benefit unit ................................. 9,687.474 --
One Multi-Manager Standard benefit unit ..................................... -- --
------------ ------------
Accumulation units end of year ................................................ 102,878.285 359.871
============ ============
DECEMBER 31, DECEMBER 31,
1999 1999
ACCUMULATION VALUE PER UNIT: ------------ ------------
ElitePlus Bonus Standard benefit unit ....................................... $ 12.368821 $ 10.179276
ElitePlus Bonus Enhanced benefit unit ....................................... 12.441523 10.000000
ElitePlus Bonus Annual Step Up benefit unit ................................. 11.766892 10.000000
One Multi-Manager Standard benefit unit ..................................... -- --
</TABLE>
<PAGE> 75
================================================================================
12 FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FRANKLIN AIM V.I.
SMALL CAP INVESTMENTS CAPITAL APPRECIATION
FUND-CLASS 2 FUND
----------------------------- ----------------------------
FOR THE PERIOD FOR THE FOR THE FOR THE
AUGUST 2, 1999 YEAR ENDED YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....................................... $ (283) $ -- $ (28,690) $ 16
Net realized gain (loss) on investments ............................ 65 -- 32,398 --
Capital gains distributions from mutual funds ...................... -- -- 98,961 316
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... 34,263 -- 1,183,393 1,540
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting from operations ..... 34,045 -- 1,286,062 1,872
------------ ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ......................................... 97,770 -- 380,496 11,353
Death benefit payments ............................................. -- -- (17,293) --
Surrenders of accumulation units by terminations and withdrawals ... -- -- (94,913) (250)
Amounts transferred from AGAIC general account ..................... 78,572 -- 1,204,128 12,974
Inter-portfolio transfers .......................................... -- -- 2,296,720 2,422
------------ ------------ ------------ ------------
Increase in net assets resulting from principal transactions .... 176,342 -- 3,769,138 26,499
Return of capital to the Company (Note A) .......................... -- -- -- --
------------ ------------ ------------ ------------
Increase in net assets from principal transactions
and return of capital to the Company .......................... 176,342 -- 3,769,138 26,499
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ....................................... 210,387 -- 5,055,200 28,371
NET ASSETS:
Beginning of year .................................................. -- -- 28,371 --
End of year ........................................................ ------------ ------------ ------------ ------------
$ 210,387 $ -- $ 5,083,571 $ 28,371
============ ============ ============ ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ........................... -- -- 263,916.198 2,550.092
ElitePlus Bonus Enhanced benefit unit ........................... -- -- 14,174.291 --
ElitePlus Bonus Annual Step Up benefit unit ..................... -- -- 49,307.880 --
One Multi-Manager Standard benefit unit ......................... 14,168.957 -- -- --
------------ ------------ ------------ ------------
Accumulation units end of year ..................................... 14,168.957 -- 327,398.369 2,550.092
============ ============ ============ ============
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ........................... $ -- $ -- $ 15.864035 $ 11.125468
ElitePlus Bonus Enhanced benefit unit ........................... -- -- 14.297796 10.000000
ElitePlus Bonus Annual Step Up benefit unit ..................... -- -- 14.077551 10.000000
One Multi-Manager Standard benefit unit ......................... 14.848464 -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 76
================================================================================
A.G. SEPARATE ACCOUNT A 13
================================================================================
<TABLE>
<CAPTION> AIM V.I. AIM V.I.
DIVERSIFIED INCOME VALUE
FUND FUND
---------------------------- -----------------------------
FOR THE FOR THE FOR THE PERIOD FOR THE
YEAR ENDED YEAR ENDED AUGUST 2, 1999 YEAR ENDED
DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....................................... $ 92,956 $ 833 $ 860 $ --
Net realized gain (loss) on investments ............................ (8,132) 1 1,612 --
Capital gains distributions from mutual funds ...................... -- 270 19,222 --
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... (111,467) (1,046) 149,337 --
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting from operations ..... (26,643) 58 171,031 --
------------ ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ......................................... 131,515 18,558 898,211 --
Death benefit payments ............................................. (8,727) -- -- --
Surrenders of accumulation units by terminations and withdrawals ... (69,867) (250) (1,109) --
Amounts transferred from AGAIC general account ..................... 877,409 1,774 987,105 --
Inter-portfolio transfers .......................................... 758,431 10,139 -- --
------------ ------------ ------------ ------------
Increase in net assets resulting from principal transactions .... 1,688,761 30,221 1,884,207 --
Return of capital to the Company (Note A) .......................... -- -- -- --
------------ ------------ ------------ ------------
Increase in net assets from principal transactions
and return of capital to the Company .......................... 1,688,761 30,221 1,884,207 --
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ....................................... 1,662,118 30,279 2,055,238 --
NET ASSETS:
Beginning of year .................................................. 30,279 -- -- --
------------ ------------ ------------ ------------
End of year ........................................................ $ 1,692,397 $ 30,279 $ 2,055,238 $ --
============ ============ ============ ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ........................... 143,977.018 2,249.186 -- --
ElitePlus Bonus Enhanced benefit unit ........................... 8,261.067 546.004 -- --
ElitePlus Bonus Annual Step Up benefit unit ..................... 23,273.690 236.187 -- --
One Multi-Manager Standard benefit unit ......................... -- -- 177,389.937 --
------------ ------------ ------------ ------------
Accumulation units end of year ..................................... 175,511.775 3,031.377 177,389.937 --
============ ============ ============ ============
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ........................... $ 9.633038 $ 9.960883 $ -- $ --
ElitePlus Bonus Enhanced benefit unit ........................... 9.760387 10.098556 -- --
ElitePlus Bonus Annual Step Up benefit unit ..................... 9.660243 9.998064 -- --
One Multi-Manager Standard benefit unit ......................... -- -- 11.585991 --
<CAPTION>
VAN KAMPEN
AIM V.I. LIFE INVESTMENT TRUST
INTERNATIONAL EQUITY EMERGING GROWTH
FUND PORTFOLIO
----------------------------- ------------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....................................... $ 2,621 $ -- $ (12,905) $ --
Net realized gain (loss) on investments ............................ 350 -- 4,223 --
Capital gains distributions from mutual funds ...................... 15,207 -- -- --
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... 121,689 -- 1,835,647 --
------------ ------------ -------------- ------------
Increase (decrease) in net assets resulting from operations ..... 139,867 -- 1,826,965 --
------------ ------------ -------------- ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ......................................... 290,290 -- 503,454 --
Death benefit payments ............................................. -- -- -- --
Surrenders of accumulation units by terminations and withdrawals ... (538) -- (52,203) --
Amounts transferred from AGAIC general account ..................... 314,210 -- 353,271 --
Inter-portfolio transfers .......................................... -- -- 32,084,636 --
------------ ------------ -------------- ------------
Increase in net assets resulting from principal transactions .... 603,962 -- 32,889,158 --
Return of capital to the Company (Note A) .......................... -- -- -- --
------------ ------------ -------------- ------------
Increase in net assets from principal transactions
and return of capital to the Company .......................... 603,962 -- 32,889,158 --
------------ ------------ -------------- ------------
TOTAL INCREASE IN NET ASSETS ....................................... 743,829 -- 34,716,123 --
NET ASSETS:
Beginning of year .................................................. -- -- -- --
------------ ------------ -------------- ------------
End of year ........................................................ $ 743,829 $ -- $ 34,716,123 $ --
============ ============ ============== ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ........................... -- -- 814,201.839 --
ElitePlus Bonus Enhanced benefit unit ........................... -- -- 77,567.805 --
ElitePlus Bonus Annual Step Up benefit unit ..................... -- -- 69,893.161 --
One Multi-Manager Standard benefit unit ......................... 51,103.010 -- 58,594.702 --
------------ ------------ -------------- ------------
Accumulation units end of year ..................................... 51,103.010 -- 1,020,257.507 --
============ ============ ============== ============
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ -------------- ------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ........................... $ -- $ -- $ 35.992433 $ --
ElitePlus Bonus Enhanced benefit unit ........................... -- -- 35.797601 --
ElitePlus Bonus Annual Step Up benefit unit ..................... -- -- 23.503735 --
One Multi-Manager Standard benefit unit ......................... 14.555490 -- 16.921777 --
</TABLE>
<PAGE> 77
==============================================================================
14 FINANCIAL STATEMENTS
==============================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VAN KAMPEN
LIFE INVESTMENT TRUST AGSPC
ENTERPRISE STOCK INDEX
PORTFOLIO FUND
------------------------------ ------------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED DECEMBER 23, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ (206) $ -- $ 8,640 $ --
Net realized gain on investments .................................. 28 -- 308 --
Capital gains distributions from mutual funds ..................... -- -- -- --
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... 18,079 -- 500,872 --
------------ ------------ -------------- ------------
Increase (decrease) in net assets resulting from operations .... 17,901 -- 509,820 --
------------ ------------ -------------- ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................................ 145,169 -- 72,004 --
Death benefit payments ............................................ -- -- -- --
Surrenders of accumulation units by terminations and withdrawals .. -- -- (26,502) --
Amounts transferred from (to) AGAIC general account ............... 30,240 -- 49,265 --
Inter-portfolio transfers ......................................... -- -- 22,447,525 --
------------ ------------ -------------- ------------
Increase in net assets resulting from principal transactions ... 175,409 -- 22,542,292 --
Return of capital to the Company (Note A) ......................... -- -- -- --
------------ ------------ -------------- ------------
Increase in net assets from principal transactions
and return of capital to the Company ......................... 175,409 -- 22,542,292 --
------------ ------------ -------------- ------------
TOTAL INCREASE IN NET ASSETS ...................................... 193,310 -- 23,052,112 --
NET ASSETS:
Beginning of year ................................................. -- -- -- --
------------ ------------ -------------- ------------
End of year ....................................................... $ 193,310 $ -- $ 23,052,112 $ --
============ ============ ============== ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit .......................... -- -- 948,596.476 --
ElitePlus Bonus Enhanced benefit unit .......................... -- -- 74,328.160 --
ElitePlus Bonus Annual Step Up benefit unit .................... -- -- 93,705.041 --
One Multi-Manager Standard benefit unit ........................ 15,986.696 -- -- --
------------ ------------ -------------- ------------
Accumulation units end of year .................................... 15,986.696 -- 1,116,629.677 --
============ ============ ============== ============
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ -------------- ------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit .......................... $ -- $ -- $ 21.444540 $ --
ElitePlus Bonus Enhanced benefit unit .......................... -- -- 21.328466 --
ElitePlus Bonus Annual Step Up benefit unit .................... -- -- 12.001403 --
One Multi-Manager Standard benefit unit ........................ 12.091912 -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 78
================================================================================
A.G. SEPARATE ACCOUNT A 15
================================================================================
<TABLE>
<CAPTION>
AGSPC AGSPC
GROWTH & INCOME INTERNATIONAL EQUITIES
FUND FUND
------------------------------ ------------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD FOR THE
DECEMBER 23, 1999 YEAR ENDED DECEMBER 23, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ 4,122 $ -- $ (859) $ --
Net realized gain on investments .................................. 833 -- 852 --
Capital gains distributions from mutual funds ..................... -- -- -- --
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... 640,445 -- 251,966 --
-------------- ------------ ------------ ------------
Increase (decrease) in net assets resulting from operations .... 645,400 -- 251,959 --
-------------- ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................................ 75,575 -- 5,286 --
Death benefit payments ............................................ -- -- -- --
Surrenders of accumulation units by terminations and withdrawals .. (65,462) -- (16,692) --
Amounts transferred from (to) AGAIC general account ............... 67,060 -- 9,355 --
Inter-portfolio transfers ......................................... 27,631,770 -- 6,572,269 --
-------------- ------------ ------------ ------------
Increase in net assets resulting from principal transactions ... 27,708,943 -- 6,570,218 --
Return of capital to the Company (Note A) ......................... -- -- -- --
-------------- ------------ ------------ ------------
Increase in net assets from principal transactions
and return of capital to the Company ......................... 27,708,943 -- 6,570,218 --
-------------- ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ...................................... 28,354,343 -- 6,822,177 --
NET ASSETS:
Beginning of year ................................................. -- -- -- --
-------------- ------------ ------------ ------------
End of year ....................................................... $ 28,354,343 $ -- $ 6,822,177 $ --
============== ============ ============ ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit .......................... 1,317,110.227 -- 405,200.438 --
ElitePlus Bonus Enhanced benefit unit .......................... 134,452.763 -- 37,660.485 --
ElitePlus Bonus Annual Step Up benefit unit .................... 188,391.481 -- 23,149.213 --
One Multi-Manager Standard benefit unit ........................ -- -- -- --
-------------- ------------ ------------ ------------
Accumulation units end of year .................................... 1,639,954.471 -- 466,010.136 --
============== ============ ============ ============
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit .......................... $ 18.013764 $ -- $ 14.814118 $ --
ElitePlus Bonus Enhanced benefit unit .......................... 17.916247 -- 14.733875 --
ElitePlus Bonus Annual Step Up benefit unit .................... 11.780478 -- 11.430398 --
One Multi-Manager Standard benefit unit ........................ -- -- -- --
<CAPTION>
AGSPC AGSPC
GOVERNMENT SECURITIES MONEY MARKET
FUND FUND
------------------------------- ------------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ 74,997 $ -- $ 12,863 $ --
Net realized gain on investments .................................. 283 -- -- --
Capital gains distributions from mutual funds ..................... -- -- -- --
Net unrealized appreciation (depreciation) of investments during
the year ......................................................... (77,673) -- -- --
-------------- ------------ ------------ ------------
Increase (decrease) in net assets resulting from operations .... (2,393) -- 12,863 --
-------------- ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................................ 2,010 -- 4,341,686 --
Death benefit payments ............................................ -- -- -- --
Surrenders of accumulation units by terminations and withdrawals .. (278,711) -- (149,480) --
Amounts transferred from (to) AGAIC general account ............... 66,130 -- (3,809,950) --
Inter-portfolio transfers ......................................... 18,738,871 -- 4,919,899 --
-------------- ------------ ------------ ------------
Increase in net assets resulting from principal transactions ... 18,528,300 -- 5,302,155 --
Return of capital to the Company (Note A) ......................... -- -- -- --
-------------- ------------ ------------ ------------
Increase in net assets from principal transactions
and return of capital to the Company ......................... 18,528,300 -- 5,302,155 --
-------------- ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS ...................................... 18,525,907 -- 5,315,018 --
NET ASSETS:
Beginning of year ................................................. -- -- -- --
-------------- ------------ ------------ ------------
End of year ....................................................... $ 18,525,907 $ -- $ 5,315,018 $ --
============== ============ ============ ============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit .......................... 1,390,590.751 -- 367,474.733 --
ElitePlus Bonus Enhanced benefit unit .......................... 120,781.826 -- 19,385.078 --
ElitePlus Bonus Annual Step Up benefit unit .................... 116,793.186 -- 35,804.348 --
One Multi-Manager Standard benefit unit ........................ -- -- 42,400.138 --
-------------- ------------ ------------ ------------
Accumulation units end of year .................................... 1,628,165.763 -- 465,064.297 --
============== ============ ============ ============
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit .......................... $ 11.469704 $ -- $ 11.654338 $ --
ElitePlus Bonus Enhanced benefit unit .......................... 11.407577 -- 11.591218 --
ElitePlus Bonus Annual Step Up benefit unit .................... 10.261000 -- 10.522117 --
One Multi-Manager Standard benefit unit ........................ -- -- 10.162799 --
</TABLE>
<PAGE> 79
================================================================================
16 FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
DIVERSIFIED EQUITY
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 73,197 $ --
Net realized gain (loss) on investments ...................................... 580 --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... (29,058) --
---------------- ----------------
Increase in net assets resulting from operations .......................... 44,719 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 366,327 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (874) --
Amounts transferred from AGAIC general account ............................... 498,722 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 864,175 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 864,175 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 908,894 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 908,894 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 86,671.205 --
---------------- ----------------
Accumulation units end of year ............................................... 86,671.205 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 10.486688 --
<CAPTION>
ONE GROUP INVESTMENT TRUST
EQUITY INDEX
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 10,972 $ --
Net realized gain (loss) on investments ...................................... -- --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 32,276 --
---------------- ----------------
Increase in net assets resulting from operations .......................... 43,248 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 222,800 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (112) --
Amounts transferred from AGAIC general account ............................... 460,417 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 683,105 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 683,105 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 726,353 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 726,353 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 65,763.834 --
---------------- ----------------
Accumulation units end of year ............................................... 65,763.834 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 11.044862 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 80
===============================================================================
A.G. SEPARATE ACCOUNT A 17
===============================================================================
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
LARGE CAP GROWTH
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 168,797 $ --
Net realized gain (loss) on investments ...................................... 1,353 --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 1,280 --
---------------- ----------------
Increase in net assets resulting from operations .......................... 171,430 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 795,847 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (1,108) --
Amounts transferred from AGAIC general account ............................... 1,003,455 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 1,798,194 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 1,798,194 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 1,969,624 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 1,969,624 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 165,757.532 --
---------------- ----------------
Accumulation units end of year ............................................... 165,757.532 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 11.882560 --
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
MID CAP VALUE
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 649 $ --
Net realized gain (loss) on investments ...................................... (132) --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 38,683 --
---------------- ----------------
Increase in net assets resulting from operations .......................... 39,200 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 379,424 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (797) --
Amounts transferred from AGAIC general account ............................... 473,345 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 851,972 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 851,972 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 891,172 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 891,172 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 90,703.969 --
---------------- ----------------
Accumulation units end of year ............................................... 90,703.969 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 9.825063 --
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
MID CAP GROWTH
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 85,669 $ --
Net realized gain (loss) on investments ...................................... 1,401 --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... (3,111) --
---------------- ----------------
Increase in net assets resulting from operations .......................... 83,959 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 256,717 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (376) --
Amounts transferred from AGAIC general account ............................... 452,125 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 708,466 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 708,466 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 792,425 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 792,425 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 64,305.328 --
---------------- ----------------
Accumulation units end of year ............................................... 64,305.328 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 12.322856 --
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
DIVERSIFIED MID CAP
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................................ $ 12,394 $ --
Net realized gain (loss) on investments ...................................... 344 --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 2,453 --
---------------- ----------------
Increase in net assets resulting from operations .......................... 15,191 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 90,897 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (104) --
Amounts transferred from AGAIC general account ............................... 93,519 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase in net assets resulting from principal transactions .............. 184,312 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase in net assets from principal transactions
and return of capital to the Company .................................... 184,312 --
---------------- ----------------
TOTAL INCREASE IN NET ASSETS ................................................. 199,503 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 199,503 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 18,757.630 --
---------------- ----------------
Accumulation units end of year ............................................... 18,757.630 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 10.635848 --
</TABLE>
<PAGE> 81
================================================================================
18 FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
GOVERNMENT BOND
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).................................................. $ 12,024 $ --
Net realized gain (loss) on investments ...................................... (142) --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... (15,597) --
---------------- ----------------
Increase (decrease) in net assets resulting from operations ............... (3,715) --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 436,509 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (2,226) --
Amounts transferred from (to) AGAIC general account .......................... 582,245 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase (decrease) in net assets resulting from principal transactions ... 1,016,528 --
Return of capital to the Company (Note A) .................................... --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 1,016,528 --
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... 1,012,813 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 1,012,813 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 101,010.476 --
---------------- ----------------
Accumulation units end of year ............................................... 101,010.476 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 10.026807 --
<CAPTION>
ONE GROUP INVESTMENT TRUST
BOND
PORTFOLIO
----------------------------------
FOR THE PERIOD FOR THE
AUGUST 2, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................. $ 13,195 $ --
Net realized gain (loss) on investments ...................................... (285) --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... (18,922) --
---------------- ----------------
Increase (decrease) in net assets resulting from operations ............... (6,012) --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 440,328 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (2,171) --
Amounts transferred from (to) AGAIC general account .......................... 600,806 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase (decrease) in net assets resulting from principal transactions ... 1,038,963 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 1,038,963 --
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... 1,032,951 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 1,032,951 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 103,548.700 --
---------------- ----------------
Accumulation units end of year ............................................... 103,548.700 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 9.975510 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 82
===============================================================================
A.G. SEPARATE ACCOUNT A 19
===============================================================================
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
BALANCED
PORTFOLIO
-----------------------------------
FOR THE
PERIOD AUGUST 2, FOR THE
1999 TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................. $ 12,718 $ --
Net realized gain (loss) on investments ...................................... -- --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 5,152 --
---------------- ----------------
Increase (decrease) in net assets resulting from operations ................ 17,870 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 227,482 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (444) --
Amounts transferred from (to) AGAIC general account .......................... 387,277 --
Inter-portfolio transfers .................................................... -- --
---------------- ----------------
Increase (decrease) in net assets resulting from principal transactions ... 614,315 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 614,315 --
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... 632,185 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 632,185 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 60,756.200 --
---------------- ----------------
Accumulation units end of year ............................................... 60,756.200 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ --
ElitePlus Bonus Enhanced benefit unit ..................................... -- --
ElitePlus Bonus Annual Step Up benefit unit ............................... -- --
One Multi-Manager Standard benefit unit ................................... 10.405275 --
<CAPTION>
OCCAT
MANAGED
PORTFOLIO
-----------------------------------
FOR THE PERIOD FOR THE
DECEMBER 23, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................. $ (11,603) $ --
Net realized gain (loss) on investments ...................................... 927 --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... 406,465 --
---------------- ----------------
Increase (decrease) in net assets resulting from operations ............... 395,789 --
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 5,292 --
Death benefit payments ....................................................... -- --
Surrenders of accumulation units by terminations and withdrawals ............. (73,230) --
Amounts transferred from (to) AGAIC general account .......................... 67,071 --
Inter-portfolio transfers .................................................... 32,470,258 --
---------------- ----------------
Increase (decrease) in net assets resulting from principal transactions ... 32,469,391 --
Return of capital to the Company (Note A) .................................... -- --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... 32,469,391 --
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... 32,865,180 --
NET ASSETS:
Beginning of year ............................................................ -- --
---------------- ----------------
End of year .................................................................. $ 32,865,180 $ --
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... 1,795,074.808 --
ElitePlus Bonus Enhanced benefit unit ..................................... 153,924.441 --
ElitePlus Bonus Annual Step Up benefit unit ............................... 124,375.734 --
One Multi-Manager Standard benefit unit ................................... -- --
---------------- ----------------
Accumulation units end of year ............................................... 2,073,374.983 --
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ 16.234116 $ --
ElitePlus Bonus Enhanced benefit unit ..................................... 16.146220 --
ElitePlus Bonus Annual Step Up benefit unit ............................... 9.957164 --
One Multi-Manager Standard benefit unit ................................... -- --
<CAPTION>
STATE STREET
GLOBAL ADVISORS
MONEY MARKET
PORTFOLIO
-----------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ................................................. $ 177,460 $ 200,202
Net realized gain (loss) on investments ...................................... -- --
Capital gains distributions from mutual funds ................................ -- --
Net unrealized appreciation (depreciation) of investments during the year .... -- --
---------------- ----------------
Increase (decrease) in net assets resulting from operations ............... 177,460 200,202
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 15,250,331 25,687,634
Death benefit payments ....................................................... (63,009) (9,530)
Surrenders of accumulation units by terminations and withdrawals ............. (236,931) (661,458)
Amounts transferred from (to) AGAIC general account .......................... (1,912,588) 1,643,371
Inter-portfolio transfers .................................................... (22,345,883) (22,706,797)
---------------- ----------------
Increase (decrease) in net assets resulting from principal transactions ... (9,308,080) 3,953,220
Return of capital to the Company (Note A) .................................... (123,066) --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... (9,431,146) 3,953,220
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... (9,253,686) 4,153,422
NET ASSETS:
Beginning of year ............................................................ 9,253,686 5,100,264
---------------- ----------------
End of year .................................................................. $ -- $ 9,253,686
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- 669,177.195
ElitePlus Bonus Enhanced benefit unit ..................................... -- 71,388.927
ElitePlus Bonus Annual Step Up benefit unit ............................... -- 76,341.784
One Multi-Manager Standard benefit unit ................................... -- --
---------------- ----------------
Accumulation units end of year ............................................... -- 816,907.906
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ 11.289602
ElitePlus Bonus Enhanced benefit unit ..................................... -- 11.235111
ElitePlus Bonus Annual Step Up benefit unit ............................... -- 10.202042
One Multi-Manager Standard benefit unit ................................... -- --
<CAPTION>
STATE STREET
GLOBAL ADVISORS
GROWTH EQUITY
PORTFOLIO
-----------------------------------
FOR THE YEAR FOR THE
ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).................................................. $ (161,132) $ (5,850)
Net realized gain (loss) on investments ...................................... 4,438,936 174,013
Capital gains distributions from mutual funds ................................ 207,995 357,781
Net unrealized appreciation (depreciation) of investments during the year .... (2,520,628) 1,582,159
---------------- ----------------
Increase (decrease) in net assets resulting from operations ............... 1,965,171 2,108,103
---------------- ----------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ................................................... 775,588 1,375,575
Death benefit payments ....................................................... (104,277) (40,042)
Surrenders of accumulation units by terminations and withdrawals ............. (1,687,107) (375,639)
Amounts transferred from (to) AGAIC general account .......................... 9,202,326 1,040,521
Inter-portfolio transfers .................................................... (21,217,544) 4,066,151
---------------- ----------------
Increase (decrease) net assets resulting from principal transactions ...... (13,031,014) 6,066,566
Return of capital to the Company (Note A) .................................... (4,435,840) --
---------------- ----------------
Increase (decrease) in net assets from principal transactions
and return of capital to the Company .................................... (17,466,854) 6,066,566
---------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...................................... (15,501,683) 8,174,669
NET ASSETS:
Beginning of year ............................................................ 15,501,683 7,327,014
---------------- ----------------
End of year .................................................................. $ -- $ 15,501,683
================ ================
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ..................................... -- 542,282.250
ElitePlus Bonus Enhanced benefit unit ..................................... -- 45,199.956
ElitePlus Bonus Annual Step Up benefit unit ............................... -- 17,008.926
One Multi-Manager Standard benefit unit ................................... -- --
---------------- ----------------
Accumulation units end of year ............................................... -- 604,491.132
================ ================
DECEMBER 31, DECEMBER 31,
1999 1998
---------------- ----------------
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ..................................... $ -- $ 19.230786
ElitePlus Bonus Enhanced benefit unit ..................................... -- 19.138038
ElitePlus Bonus Annual Step Up benefit unit ............................... -- 10.772225
One Multi-Manager Standard benefit unit ................................... -- --
</TABLE>
<PAGE> 83
================================================================================
20 FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CREDIT SUISSE CREDIT SUISSE
GROWTH AND INCOME INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ......................... $ 87,992 $ 132,517 $ 33,511 $ (20,863)
Net realized gain (loss) on investments .............. 3,398,132 171,523 1,264,725 (51,421)
Capital gains distributions from mutual funds ........ 73,271 396,781 -- --
Net unrealized appreciation (depreciation)
of investments during the year ..................... (1,413,027) 721,291 181,673 (8,961)
-------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting
from operations .................................. 2,146,368 1,422,112 1,479,909 (81,245)
-------------- -------------- -------------- --------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................... 999,212 1,751,605 274,873 453,737
Death benefit payments ............................... (227,683) (64,603) (39,388) (2,388)
Surrenders of accumulation units by terminations
and withdrawals .................................... (2,167,622) (415,923) (431,213) (88,339)
Amounts transferred from (to) AGAIC general account .. 11,898,354 1,381,487 2,343,820 240,397
Inter-portfolio transfers ............................ (25,629,269) 5,250,448 (6,647,661) 1,163,472
-------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting from
principal transactions .......................... (15,127,008) 7,903,014 (4,499,569) 1,766,879
Return of capital to the Company (Note A) ............ (3,732,483) -- (2,976,299) --
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from
principal transactions and return of
capital to the Company .......................... (18,859,491) 7,903,014 (7,475,868) 1,766,879
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............. (16,713,123) 9,325,126 (5,995,959) 1,685,634
NET ASSETS:
Beginning of year .................................... 16,713,123 7,387,997 5,995,959 4,310,325
-------------- -------------- -------------- --------------
End of year .......................................... $ -- $ 16,713,123 $ -- $ 5,995,959
============== ============== ============== ==============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ............. -- 712,462.456 -- 262,854.312
ElitePlus Bonus Enhanced benefit unit ............. -- 94,362.916 -- 27,231.843
ElitePlus Bonus Annual Step Up benefit unit ....... -- 25,644.192 -- 2,471.687
One Multi-Manager Standard benefit unit ........... -- -- -- --
-------------- -------------- -------------- --------------
Accumulation units end of year ....................... -- 832,469.564 -- 292,557.842
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ............ $ -- $ 16.187812 $ -- $ 11.964095
ElitePlus Bonus Enhanced benefit unit ............ -- 16.109724 -- 11.906346
ElitePlus Bonus Annual Step Up benefit unit ...... -- 10.595938 -- 9.239698
One Multi-Manager Standard benefit unit .......... -- -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 84
===============================================================================
A.G. SEPARATE ACCOUNT A 21
===============================================================================
<TABLE>
<CAPTION>
AMERICAN GENERAL
VAN KAMPEN U.S. GOVERNMENT
EMERGING GROWTH SECURITIES
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......................... $ (262,308) $ (95,996) $ 377,640 $ 264,400
Net realized gain (loss) on investments .............. 17,471,124 256,963 (410,976) 22,495
Capital gains distributions from mutual funds ........ -- -- 4,086 32,231
Net unrealized appreciation (depreciation)
of investments during the year ..................... (3,066,379) 2,483,874 (36,492) 19,198
-------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting
from operations .................................. 14,142,437 2,644,841 (65,742) 338,324
-------------- -------------- -------------- --------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................... 873,517 929,992 139,738 1,379,453
Death benefit payments ............................... (163,136) (199,282) (144,534) --
Surrenders of accumulation units by
terminations and withdrawals ....................... (1,512,915) (329,791) (1,496,390) (135,502)
Amounts transferred from (to) AGAIC
general account .................................... 6,253,696 595,708 14,251,042 1,136,001
Inter-portfolio transfers ............................ (29,394,754) 2,461,318 (18,924,903) 1,975,016
-------------- -------------- -------------- --------------
Increase (decrease) in net assets resulting from
principal transactions .......................... (23,943,592) 3,457,945 (6,175,047) 4,354,968
Return of capital to the Company (Note A) ............ (1,800,228) -- (2,438,402) --
-------------- -------------- -------------- --------------
Increase (decrease) in net assets from
principal transactions and return
of capital to the Company ....................... (25,743,820) 3,457,945 (8,613,449) 4,354,968
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............. (11,601,383) 6,102,786 (8,679,191) 4,693,292
NET ASSETS:
Beginning of year .................................... 11,601,383 5,498,597 8,679,191 3,985,899
-------------- -------------- -------------- --------------
End of year .......................................... $ -- $ 11,601,383 $ -- $ 8,679,191
============== ============== ============== ==============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ............. -- 501,049.913 -- 461,727.241
ElitePlus Bonus Enhanced benefit unit ............. -- 58,826.233 -- 69,900.862
ElitePlus Bonus Annual Step Up benefit unit ....... -- 12,267.803 -- 11,095.044
One Multi-Manager Standard benefit unit ........... -- -- -- --
-------------- -------------- -------------- --------------
Accumulation units end of year ....................... -- 572,143.949 -- 542,723.147
============== ============== ============== ==============
<CAPTION>
ELITEVALUE
PORTFOLIO
-------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ......................... $ (107,418) $ 63,607
Net realized gain (loss) on investments .............. 1,534,081 190,973
Capital gains distributions from mutual funds ........ 23,975 201,075
Net unrealized appreciation (depreciation)
of investments during the year ..................... (810,829) 100,055
-------------- --------------
Increase (decrease) in net assets resulting
from operations .................................. 639,809 555,710
-------------- --------------
PRINCIPAL TRANSACTIONS:
Contract purchase payments ........................... 1,068,366 2,065,606
Death benefit payments ............................... (556,020) (214,985)
Surrenders of accumulation units by
terminations and withdrawals ....................... (2,559,305) (756,313)
Amounts transferred from (to) AGAIC
general account .................................... 15,332,287 1,813,521
Inter-portfolio transfers ............................ (32,845,354) 7,685,769
-------------- --------------
Increase (decrease) in net assets resulting from
principal transactions .......................... (19,560,026) 10,593,598
Return of capital to the Company (Note A) ............ (1,699,710) --
-------------- --------------
Increase (decrease) in net assets from
principal transactions and return
of capital to the Company ....................... (21,259,736) 10,593,598
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .............. (20,619,927) 11,149,308
NET ASSETS:
Beginning of year .................................... 20,619,927 9,470,619
-------------- --------------
End of year .......................................... $ -- $ 20,619,927
============== ==============
UNITS OUTSTANDING, BY CLASS:
ElitePlus Bonus Standard benefit unit ............. -- 1,100,459.217
ElitePlus Bonus Enhanced benefit unit ............. -- 99,776.317
ElitePlus Bonus Annual Step Up benefit unit ....... -- 23,358.578
One Multi-Manager Standard benefit unit ........... -- --
-------------- --------------
Accumulation units end of year ....................... -- 1,223,594.112
============== ==============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ............ $ -- $ 18.713769 $ -- $ 11.564124
ElitePlus Bonus Enhanced benefit unit ............ -- 18.623470 -- 11.508303
ElitePlus Bonus Annual Step Up benefit unit ...... -- 12.231475 -- 10.354838
One Multi-Manager Standard benefit unit .......... -- -- -- --
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
ACCUMULATION VALUE PER UNIT:
ElitePlus Bonus Standard benefit unit ............ $ -- $ 15.645505
ElitePlus Bonus Enhanced benefit unit ............ -- 15.570036
ElitePlus Bonus Annual Step Up benefit unit ...... -- 9.604830
One Multi-Manager Standard benefit unit .......... -- --
</TABLE>
<PAGE> 85
================================================================================
22 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE A - ORGANIZATION
A.G. Separate Account A (the "Separate Account") was established by
American General Annuity Insurance Company ("AGAIC" or "the Company") to fund
variable annuity insurance contracts issued by the Company. AGAIC is an indirect
wholly-owned subsidiary of American General Corporation. Prior to May 1, 1998,
the Separate Account was registered as WNL Separate Account A. On May 1, 1998,
the Separate Account changed its name to AGA Separate Account A, and
subsequently on May 1, 1999 the Separate Account changed its name to A.G.
Separate Account A. The Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940, as amended.
The Separate Account is divided into 28 sub-accounts. Five of the
sub-accounts invest in one portfolio of American General Series Portfolio
Company (AGSPC). AGSPC is managed by The Variable Annuity Life Insurance Company
("VALIC" or the "Advisor"), an indirect wholly-owned subsidiary of American
General Corporation. The remaining sub-accounts are managed by third-party
portfolio managers. As of December 31, 1999, the mutual funds available to
contract holders through the various sub-accounts are as follows:
<TABLE>
<S> <C>
Oppenheimer Variable Account Funds American General Series Portfolio Company ("AGSPC"):
Oppenheimer Main Street Growth & Income Fund/VA(1) AGSPC Stock Index Fund
Oppenheimer Capital Appreciation Fund/VA(2) AGSPC Growth & Income Fund
Oppenheimer Small Cap Growth Fund/VA(3) AGSPC International Equities Fund
Oppenheimer High Income Fund/VA(4) AGSPC Government Securities Fund
AGSPC Money Market Fund
Templeton Variable Products Series Fund
Templeton Developing Markets Fund-Class 2 One Group Investment Trust
Templeton International Fund-Class 2 One Group Investment Trust Diversified Equity Portfolio
Franklin Small Cap Investments Fund-Class 2 One Group Investment Trust Equity Index Portfolio
One Group Investment Trust Large Cap Growth Portfolio
AIM Variable Insurance Funds, Inc. One Group Investment Trust Mid Cap Value Portfolio
AIM V.I. Capital Appreciation Fund One Group Investment Trust Mid Cap Growth Portfolio
AIM V.I. Diversified Income Fund One Group Investment Trust Diversified Mid Cap Portfolio
AIM V.I. Value Fund One Group Investment Trust Government Bond Portfolio
AIM V.I. International Equity Fund One Group Investment Trust Bond Portfolio
One Group Investment Trust Balanced Portfolio
Van Kampen Life Investment Trust ("LIT")
Van Kampen Life Investment Trust Emerging Growth Portfolio OCC Accumulation Trust
Van Kampen Life Investment Trust Enterprise Portfolio OCCAT Managed Portfolio
</TABLE>
In addition to the twenty-eight sub-accounts above, a contract owner may
allocate contract funds to a Fixed Account, which is part of the Company's
general account. Contract owners should refer to the ElitePlus Bonus Variable
Annuity Prospectus and The One Multi Manager Annuity Prospectus for a complete
description of the available mutual funds.
Net premiums from the contracts are allocated to the sub-accounts and
invested in the funds in accordance with contract owner instructions and are
recorded as principal transactions in the statement of changes in net assets.
There is no assurance that the investment objectives of any of the Funds will be
met. Contract owners bear the complete investment risk for purchase payments
allocated to a sub-account.
SUBSTITUTION AND NEW PRODUCT. On August 2, 1999, The One-Multi Manager
Annuity product was first offered in the Separate Account. The One Multi Manager
Annuity product consists of 17 subaccounts. The subaccounts include the
Oppenheimer High Income Fund/VA, Templeton Developing Markets Fund-Class 2,
Franklin Small Cap Investments Fund-Class 2, AIM V.I. Value Fund, AIM V.I.
International Equity Fund, Van Kampen Life Investment Trust Emerging Growth
Portfolio, Van Kampen Life Investment Trust Enterprise Portfolio, AGSPC Money
Market Fund, One Group Investment Trust Diversified Equity Portfolio, One Group
Investment Trust Equity Index Portfolio, One Group Investment Trust Large Cap
Growth Portfolio, One Group investment Trust Mid Cap Value Portfolio, One Group
Investment Trust Mid Cap Growth Portfolio, One Group Investment Trust
Diversified Mid Cap Portfolio, One Group Investment Trust Government Bond
Portfolio, One Group Investment Trust Bond Portfolio, One Group Investment Trust
Balanced Portfolio.
--------------------------------------------------------------------------------
(1) formerly known as Oppenheimer Growth & Income Fund.
(2) formerly known as Oppenheimer Growth Fund.
(3) formerly known as Oppenheimer Small Cap Fund.
(4) formerly known as Oppenheimer High Income Fund.
<PAGE> 86
================================================================================
NOTES TO FINANCIAL STATEMENTS 23
================================================================================
Effective December 23, 1999, the A.G. Series Trust which was a part of the
Separate Account was substituted for other third party funds. The substitution
occurred as follows:
<TABLE>
<CAPTION>
REPLACED SERIES OF THE TRUST SUBSTITUTE FUNDS
-------------------------------------------------------------------------- ----------------
NET ASSETS AT
TIME OF
SUB-ACCOUNT NAME SUBSTITUTION SUB-ACCOUNT NAME
---------------- ------------ ----------------
<S> <C> <C>
State Street Global Advisors Money Market Portfolio $ 5,061,161 AGSPC Money Market Fund
State Street Global Advisors Growth Equity Portfolio 22,469,923 AGSPC Stock Index Fund
Credit Suisse Growth and Income Portfolio 27,534,536 AGSPC Growth & Income Fund
Credit Suisse International Equity Portfolio 6,597,599 AGSPC International Equities Fund
Van Kampen Emerging Growth Portfolio 31,935,070 Van Kampen Life Investment Trust
Emerging Growth Portfolio
American General U.S. Government Securities Portfolio 18,862,632 AGSPC Government Securities Fund
EliteValue Portfolio 32,948,620 OCCAT Managed Portfolio
</TABLE>
The substitutions are expected to result in enhanced administrative
efficiency and improved investment choices for the participants. The
substitution took place at relative net assets value as shown in the table
above, with no change in the amount of any contract owner's contract value, cash
value, death benefit or in the dollar value investment in the Separate Account.
All expenses incurred in connection with the substitutions were paid by AGAIC.
SEED MONEY DISTRIBUTION. Total capital ("seed money") distributed back to
the Company on December 23, 1999 was $17,206,028, which was comprised of the
original contribution, dividends and realized gains of $9,600,000, $2,377,477
and $5,228,551, respectively.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Separate Account have been
prepared on the basis of generally accepted accounting principles. The
accounting principles followed by the Separate Account and the methods of
applying those principles are presented below or in the footnotes which follow.
INVESTMENT VALUATION. The investment shares of the Portfolios are valued at
the closing net asset value (market) per share as determined by the fund on the
day of measurement. Changes in the economic environment have a direct impact on
the net asset value per share of a Portfolio. It is reasonably possible that
changes in the economic environment will occur in the near term and that such
changes will have a material effect on the net asset value per share of the
Portfolios included in the Separate Account.
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME. Investment
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. Realized gains and losses from investment transactions are
reported on the basis of first-in, first-out for financial reporting and federal
income tax purposes.
ANNUITY RESERVES. At December 31, 1999 the Separate Account did not have
contracts in the annuity pay-out phase; therefore, no future policy benefit
reserve was required.
FEDERAL INCOME TAXES. The Company is taxed as a life insurance company and
includes the operations of the Separate Account in its federal income tax
return. As a result, the Separate Account is not taxed as a "Regulated
Investment Company" under subchapter M of the Internal Revenue Code. Under
existing laws, taxes are not currently payable on the investment income on the
realized gains of the Separate Account. The Company reserves the right to
allocate to the Separate Account any federal, state, or other tax liability that
may result in the future from maintenance of the Separate Account.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the reported amounts of income and expenses during the period.
Actual results could differ from those estimates.
NOTE C - CONTRACT CHARGES
Deductions for the administrative expenses and mortality and expense risks
assumed by the Company are calculated daily, at an annual rate, on the average
daily net asset value of the Portfolios attributable to the contract owners and
are paid to the
<PAGE> 87
================================================================================
24 NOTES TO FINANCIAL STATEMENTS
================================================================================
Company. The annual rate for administrative expenses is 0.15% and the annual
rate for the mortality and expense risks is 1.25% for the ElitePlus Bonus
product and 0.15% and 1.00% respectively, for The One Multi-Manager Annuity
product. ElitePlus Bonus product also has optional death benefit charges of
0.05% and 0.10% for the optional Enhanced Death Benefit and the optional Annual
Step Up death benefit, respectively. For the year ended December 31, 1999,
deductions for administrative expenses were $12,419 and mortality and expense
risk charges were $1,769,029.
An annual maintenance charge of $30 per contract is assessed on the
contract anniversary during the accumulation period for the maintenance of the
ElitePlus Bonus product contract. The maintenance charge is not an expense of
the Separate Account but rather is paid by a redemption of units outstanding and
is not assessed if the contract value on the contract anniversary equals or
exceeds $40,000. Maintenance charges totaled $47,091 for the year ended December
31, 1999.
A contingent deferred sales charge is applicable to certain contract
withdrawals pursuant to the contract and is payable to the Company. For the year
ended December 31, 1999, deferred sales charges totaled $315,863 and are
included as a component of surrenders and withdrawals on the statement of
changes in net assets.
NOTE D - SECURITY PURCHASES AND SALES
For the year ended December 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments were:
<TABLE>
<CAPTION>
UNDERLYING FUND PURCHASES SALES
--------------- --------- -----
<S> <C> <C>
Oppenheimer Main Street Growth & Income Fund/VA ................ $ 8,350,381 $ 655,012
Oppenheimer Capital Appreciation Fund/VA ....................... 5,069,090 647,471
Oppenheimer Small Cap Growth Fund/VA ........................... 1,399,966 125,254
Oppenheimer High Income Fund/VA ................................ 2,477,166 282,158
Templeton Developing Markets Fund-Class 2 ...................... 1,335,393 646,036
Templeton International Fund-Class 2 ........................... 1,427,704 311,566
Franklin Small Cap Investments Fund-Class 2 .................... 176,317 258
AIM V.I. Capital Appreciation Fund ............................. 4,431,931 592,523
AIM V.I. Diversified Income Fund ............................... 2,008,837 227,120
AIM V.I. Value Fund ............................................ 1,921,891 17,602
AIM V.I. International Equity Fund ............................. 623,485 1,695
Van Kampen Life Investment Trust Emerging Growth Portfolio ..... 32,888,020 11,767
Van Kampen Life Investment Trust Enterprise Portfolio .......... 175,415 212
AGSPC Stock Index Fund ......................................... 22,568,036 17,104
AGSPC Growth & Income Fund ..................................... 27,753,928 40,862
AGSPC International Equities Fund .............................. 6,604,999 35,642
AGSPC Government Securities Fund ............................... 18,945,064 341,766
AGSPC Money Market Fund ........................................ 7,973,781 2,658,764
One Group Investment Trust Diversified Equity Portfolio ........ 961,189 23,816
One Group Investment Trust Equity Index Portfolio .............. 694,076 -
One Group Investment Trust Large Cap Growth Portfolio .......... 1,984,048 17,057
One Group Investment Trust Mid Cap Value Portfolio ............. 877,828 25,207
One Group Investment Trust Mid Cap Growth Portfolio ............ 807,622 13,487
One Group Investment Trust Diversified Mid Cap Portfolio ....... 205,523 8,817
One Group Investment Trust Government Bond Portfolio ........... 1,049,485 20,933
One Group Investment Trust Bond Portfolio ...................... 1,074,478 22,319
One Group Investment Trust Balanced Portfolio .................. 627,071 38
OCCAT Managed Portfolio ........................................ 32,585,366 127,577
State Street Global Advisors Money Market Portfolio ............ 14,030,405 23,284,092
State Street Global Advisors Growth Equity Portfolio ........... 12,296,586 29,716,577
Credit Suisse Growth and Income Portfolio ...................... 16,572,071 35,270,299
Credit Suisse International Equity Portfolio ................... 3,830,823 11,273,180
Van Kampen Emerging Growth Portfolio ........................... 10,496,480 36,502,607
American General U.S. Government Securities Portfolio .......... 15,741,605 23,973,329
EliteValue Portfolio ........................................... 19,935,880 41,279,060
------------ ------------
TOTAL $279,901,940 $208,171,207
============ ============
</TABLE>
<PAGE> 88
================================================================================
NOTES TO FINANCIAL STATEMENTS 25
================================================================================
NOTE E - INVESTMENTS
The cost of fund shares is the same for financial reporting and federal
income tax purposes. The following is a summary of fund shares owned as of
December 31, 1999:
<TABLE>
<CAPTION>
UNREALIZED
MARKET APPRECIATION
UNDERLYING FUND SHARES PRICE MARKET COST (DEPRECIATION)
--------------- -------------- ------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Oppenheimer Main Street Growth & Income Fund/VA .............. 349,990.858 $24.63 $ 8,620,275 $ 7,815,761 $ 1,804,514
Oppenheimer Capital Appreciation Fund/VA ..................... 112,291.169 49.84 5,596,592 4,464,267 1,132,325
Oppenheimer Small Cap Growth Fund/VA ......................... 134,034.500 14.07 1,885,865 1,300,894 584,971
Oppenheimer High Income Fund/VA .............................. 205,642.865 10.72 2,204,492 2,203,265 1,227
Templeton Developing Markets Fund-Class 2 .................... 110,468.237 7.74 855,024 740,662 114,362
Templeton International Fund-Class 2 ......................... 57,252.613 22.13 1,267,000 1,125,983 141,017
Franklin Small Cap Investments Fund-Class 2 .................. 13,366.407 15.74 210,387 176,124 34,263
AIM V.I. Capital Appreciation Fund ........................... 142,877.207 35.58 5,083,571 3,898,638 1,184,933
AIM V.I. Diversified Income Fund ............................. 168,230.298 10.06 1,692,397 1,804,910 (112,513)
AIM V.I. Value Fund .......................................... 61,350.394 33.50 2,055,238 1,905,901 149,337
AIM V.I. International Equity Fund ........................... 25,395.335 29.29 743,829 622,140 121,689
Van Kampen Life Investment Trust Emerging Growth Portfolio.... 750,943.616 46.23 34,716,123 32,880,476 1,835,647
Van Kampen Life Investment Trust Enterprise Portfolio ........ 7,403.666 26.11 193,310 175,232 18,078
AGSPC Stock Index Fund ....................................... 518,724.399 44.44 23,052,112 22,551,240 500,872
AGSPC Growth & Income Fund ................................... 1,289,419.874 21.99 28,354,343 27,713,898 640,445
AGSPC International Equities Fund ............................ 494,360.610 13.80 6,822,177 6,570,210 251,967
AGSPC Government Securities Fund ............................. 1,943,956.623 9.53 18,525,907 18,603,580 (77,673)
AGSPC Money Market Fund ...................................... 5,315,017.940 1.00 5,315,018 5,315,018 --
One Group Investment Trust Diversified Equity Portfolio ...... 51,729.874 17.57 908,894 937,952 (29,058)
One Group Investment Trust Equity Index Portfolio ............ 56,132.340 12.94 726,353 694,077 32,276
One Group Investment Trust Large Cap Growth Portfolio ........ 74,157.523 26.56 1,969,624 1,968,344 1,280
One Group Investment Trust Mid Cap Value Portfolio ........... 85,772.109 10.39 891,172 852,489 38,683
One Group Investment Trust Mid Cap Growth Portfolio .......... 38,560.841 20.55 792,425 795,536 (3,111)
One Group Investment Trust Diversified Mid Cap Portfolio ..... 13,142.510 15.18 199,503 197,050 2,453
One Group Investment Trust Government Bond Portfolio ......... 101,688.007 9.96 1,012,813 1,028,410 (15,597)
One Group Investment Trust Bond Portfolio .................... 103,502.114 9.98 1,032,951 1,051,873 (18,922)
One Group Investment Trust Balanced Portfolio ................ 40,317.919 15.68 632,185 627,033 5,152
OCCAT Managed Portfolio ...................................... 752,925.088 43.65 32,865,180 32,458,715 406,465
-------------- ----- ------------ ------------ --------------
TOTAL 13,018,654.936 $188,224,760 $180,479,678 $ 7,745,082
============== ===== ============ ============ ==============
</TABLE>
<PAGE> 89
================================================================================
26 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS
The Company offers owners ElitePlus Bonus Standard, ElitePlus Bonus Enhanced,
ElitePlus Bonus Annual Step Up and One Multi Manager Annuity standard contracts,
which differ in the calculation of death benefits and related charges. The
increase (decrease) in accumulation units for the year ended December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER MAIN STREET CAPITAL
GROWTH & INCOME APPRECIATION
FUND/VA FUND/VA
--------------------------------- ---------------------------------
1999 1998 1999 1998
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units
(formerly known as Standard benefit units):
Outstanding at beginning of year 6,629.025 -- 1,662.071 --
Increase for payments received 63,900.930 631.898 33,516.450 252.790
Decrease for surrendered contracts (6,952.990) -- (6,619.800) --
Decrease for death claims (1,970.630) -- -- --
Change for net inter-portfolio exchanges* 500,925.545 5,997.127 290,082.869 1,409.281
----------- --------- ----------- ---------
Outstanding at end of period 562,531.880 6,629.025 318,641.590 1,662.071
=========== ========= =========== =========
ElitePlus Bonus Enhanced benefit units
(formerly known as Enhanced benefit units):
Outstanding at beginning of year 792.916 -- -- --
Increase for payments received 3,389.080 -- 32.280 --
Decrease for surrendered contracts (3,508.420) -- (1,656.710) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 30,106.127 792.916 24,294.817 --
----------- --------- ----------- ---------
Outstanding at end of period 30,779.703 792.916 22,670.387 --
=========== ========= =========== =========
ElitePlus Bonus Annual Step up benefit units
(formerly known as Bonus benefit units):
Outstanding at beginning of year -- -- 218.755 --
Increase for payments received 3,875.910 -- 2,066.600 218.755
Decrease for surrendered contracts (1,594.070) -- (354.380) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 95,675.427 -- 36,352.407 --
----------- --------- ----------- ---------
Outstanding at end of period 97,957.267 -- 38,283.382 218.755
=========== ========= =========== =========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- --------- ----------- ---------
Outstanding at end of period -- -- -- --
=========== ========= =========== =========
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 90
================================================================================
NOTES TO FINANCIAL STATEMENTS 27
================================================================================
<TABLE>
<CAPTION>
OPPENHEIMER TEMPLETON
SMALL CAP OPPENHEIMER DEVELOPING
GROWTH HIGH INCOME MARKETS
FUND/VA FUND/VA FUND-CLASS 2
------------------------ ------------------------ -----------------------
1999 1998 1999 1998 1999 1998
---------- --------- ----------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units
(formerly known as Standard benefit units):
Outstanding at beginning of year 2,972.732 -- 1,791.585 -- -- --
Increase for payments received 4,486.930 1,124.352 13,881.690 1,124.352 5,332.650 --
Decrease for surrendered contracts (582.860) (24.086) (3,237.360) (25.030) (595.640) --
Decrease for death claims (880.080) -- -- -- (973.570) --
Change for net inter-portfolio exchanges* 88,775.565 1,872.466 113,458.248 692.263 42,386.342 --
---------- --------- ----------- --------- ---------- ---------
Outstanding at end of period 94,772.287 2,972.732 125,894.163 1,791.585 46,149.782 --
========== ========= =========== ========= ========== =========
ElitePlus Bonus Enhanced benefit units
(formerly known as Enhanced benefit units):
Outstanding at beginning of year 4.463 -- 22.316 -- -- --
Increase for payments received -- -- 54.250 -- -- --
Decrease for surrendered contracts (0.410) -- (1,645.150) -- (0.420) --
Decrease for death claims
Change for net inter-portfolio exchanges* 9,061.708 4.463 13,583.659 22.316 906.218 --
---------- --------- ----------- --------- ---------- ---------
Outstanding at end of period 9,065.761 4.463 12,015.075 22.316 905.798 --
========== ========= =========== ========= ========== =========
ElitePlus Bonus Annual Step up benefit units
(formerly known as Bonus benefit units):
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received 217.150 -- 2.750 -- -- --
Decrease for surrendered contracts (498.210) -- (295.080) -- (33.520) --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* 15,132.761 -- 33,821.810 -- 5,154.966 --
---------- --------- ----------- --------- ---------- ---------
Outstanding at end of period 14,851.701 -- 33,529.480 -- 5,121.446 --
========== ========= =========== ========= ========== =========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received -- -- 20,865.919 -- 3,311.406 --
Decrease for surrendered contracts -- -- (48.351) -- -- --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* -- -- 23,647.545 -- 3,407.374 --
---------- --------- ----------- --------- ---------- ---------
Outstanding at end of period -- -- 44,465.113 -- 6,718.780 --
========== ========= =========== ========= ========== =========
</TABLE>
<PAGE> 91
================================================================================
28 NOTES TO Financial Statements
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
FRANKLIN
TEMPLETON SMALL CAP
INTERNATIONAL INVESTMENTS
FUND-CLASS 2 FUND-CLASS 2
-------------------------- -------------------------
1999 1998 1999 1998
---------- ------------ --------- --------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 359.871 -- -- --
Increase for payments received 10,034.630 -- -- --
Decrease for surrendered contracts (699.080) -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 78,702.824 359.871 -- --
---------- ------------ --------- --------
Outstanding at end of period 88,398.245 359.871 -- --
========== ============ ========= ========
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts (0.270) -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 4,792.836 -- -- --
---------- ------------ --------- --------
Outstanding at end of period 4,792.566 -- -- --
========== ============ ========= ========
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received 386.890 -- -- --
Decrease for surrendered contracts (132.230) -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 9,432.814 -- -- --
---------- ------------ --------- --------
Outstanding at end of period 9,687.474 -- -- --
========== ============ ========= ========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- 7,824.166 --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- 6,344.791 --
---------- ------------ --------- --------
Outstanding at end of period -- -- 14,168.957 --
========== ============ ========= ========
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 92
================================================================================
NOTES TO FINANCIAL STATEMENTS 29
================================================================================
<TABLE>
<CAPTION>
AIM V.I. AIM V.I.
CAPITAL DIVERSIFIED AIM V.I.
APPRECIATION INCOME VALUE
FUND FUND FUND
-------------------------- -------------------------- --------------------------
1999 1998 1999 1998 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 2,550.092 -- 2,249.186 -- -- --
Increase for payments received 26,486.700 1,124.352 12,865.930 1,628.046 -- --
Decrease for surrendered contracts (5,417.440) (23.393) (6,291.160) (25.346) -- --
Decrease for death claims (1,523.720) -- (901.160) -- -- --
Change for net inter-portfolio exchanges* 241,820.566 1,449.133 136,054.222 646.486 -- --
----------- --------- ----------- --------- ----------- -----------
Outstanding at end of period 263,916.198 2,550.092 143,977.018 2,249.186 -- --
=========== ========= =========== ========= =========== ===========
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- 546.004 -- -- --
Increase for payments received 234.750 -- -- -- -- --
Decrease for surrendered contracts (1,744.170) -- (205.750) -- -- --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* 15,683.711 -- 7,920.813 546.004 -- --
----------- --------- ----------- --------- ----------- -----------
Outstanding at end of period 14,174.291 -- 8,261.067 546.004 -- --
=========== ========= =========== ========= =========== ===========
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- 236.187 -- -- --
Increase for payments received 4,958.560 -- 420.780 236.187 -- --
Decrease for surrendered contracts (771.570) -- (724.420) -- -- --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* 45,120.890 -- 23,341.143 -- -- --
----------- --------- ----------- --------- ----------- -----------
Outstanding at end of period 49,307.880 -- 23,273.690 236.187 -- --
=========== ========= =========== ========= =========== ===========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received -- -- -- -- 84,099.740 --
Decrease for surrendered contracts -- -- -- -- (103.972) --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- -- 93,394.169 --
----------- --------- ----------- --------- ----------- -----------
Outstanding at end of period -- -- -- -- 177,389.937 --
=========== ========= =========== ========= =========== ===========
</TABLE>
<PAGE> 93
================================================================================
30 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
AIM V.I. VAN KAMPEN
INTERNATIONAL LIFE INVESTMENT TRUST
EQUITY EMERGING GROWTH
FUND PORTFOLIO
--------------------- ----------------------
1999 1998 1999 1998
------------ ------- ------------ --------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- 1,359.440 --
Decrease for surrendered contracts -- -- (549.130) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- 813,391.529 --
----------- ----- ------------ -----
Outstanding at end of period -- -- 814,201.839 --
=========== ===== ============ =====
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- (903.030) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- 78,470.835 --
----------- ----- ------------ -----
Outstanding at end of period -- -- 77,567.805 --
=========== ===== ============ =====
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- (34.390) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- 69,927.551 --
----------- ----- ------------ -----
Outstanding at end of period -- -- 69,893.161 --
=========== ===== ============ =====
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received 24,358.586 -- 35,837.242 --
Decrease for surrendered contracts (45.603) -- (30.619) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 26,790.027 -- 22,788.079 --
----------- ----- ------------ -----
Outstanding at end of period 51,103.010 -- 58,594.702 --
=========== ===== ============ =====
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 94
================================================================================
NOTES TO FINANCIAL STATEMENTS 31
================================================================================
<TABLE>
<CAPTION>
VAN KAMPEN
LIFE INVESTMENT TRUST AGSPC AGSPC
ENTERPRISE STOCK INDEX GROWTH & INCOME
PORTFOLIO FUND FUND
---------------------- ------------------- -----------------------
1999 1998 1998 1999 1999 1998
---------- ------- ------------ ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received -- -- 3,366.130 -- 4,191.830 --
Decrease for surrendered contracts -- -- (1,146.900) -- (2,105.000) --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* -- -- 946,377.246 -- 1,315,023.397 --
----------- ---- ----------- ---- ------------ ----
Outstanding at end of period -- -- 948,596.476 -- 1,317,110.227 --
=========== ==== =========== ==== ============ ====
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received -- -- -- -- -- --
Decrease for surrendered contracts -- -- (61.380) -- (1,230.790) --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* -- -- 74,389.540 -- 135,683.553 --
----------- ---- ----------- ---- ------------ ----
Outstanding at end of period -- -- 74,328.160 -- 134,452.763 --
=========== ==== =========== ==== ============ ====
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received -- -- 25.190 -- 12.820 --
Decrease for surrendered contracts -- -- (69.470) -- (508.670) --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* -- -- 93,749.321 -- 188,887.331 --
----------- ---- ----------- ---- ------------ ----
Outstanding at end of period -- -- 93,705.041 -- 188,391.481 --
=========== ==== =========== ==== ============ ====
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- -- -- --
Increase for payments received 13,220.803 -- -- -- -- --
Decrease for surrendered contracts -- -- -- -- -- --
Decrease for death claims -- -- -- -- -- --
Change for net inter-portfolio exchanges* 2,765.893 -- -- -- -- --
----------- ---- ----------- ---- ------------ ----
Outstanding at end of period 15,986.696 -- -- -- -- --
=========== ==== =========== ==== ============ ====
</TABLE>
<PAGE> 95
================================================================================
32 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
AGSPC AGSPC
INTERNATIONAL GOVERNMENT
EQUITIES SECURITIES
FUND FUND
----------------------------- -------------------------------
1999 1998 1999 1998
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received 403.900 -- 179.000 --
Decrease for surrendered contracts (1,095.910) -- (19,701.980) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 405,892.448 -- 1,410,113.731 --
------------ ------------ ------------- ------------
Outstanding at end of period 405,200.438 -- 1,390,590.751 --
------------ ------------ ------------- ------------
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- (3,802.960) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 37,660.485 -- 124,584.786 --
------------ ------------ ------------- ------------
Outstanding at end of period 37,660.485 -- 120,781.826 --
------------ ------------ ------------- ------------
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts (54.420) -- (888.960) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 23,203.633 -- 117,682.146 --
------------ ------------ ------------- ------------
Outstanding at end of period 23,149.213 -- 116,793.186 --
------------ ------------ ------------- ------------
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
------------ ------------ ------------- ------------
Outstanding at end of period -- -- -- --
------------ ------------ ------------- ------------
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 96
================================================================================
NOTES TO FINANCIAL STATEMENTS 33
================================================================================
<TABLE>
<CAPTION>
AGSPC ONE GROUP INVESTMENT TRUST
MONEY MARKET DIVERSIFIED EQUITY
FUND PORTFOLIO
------------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received 9,380.370 -- -- --
Decrease for surrendered contracts (12,826.110) -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 370,920.473 -- -- --
----------- ----------- ----------- -----------
Outstanding at end of period 367,474.733 -- -- --
----------- ----------- ----------- -----------
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts (11.660) -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 19,396.738 -- -- --
----------- ----------- ----------- -----------
Outstanding at end of period 19,385.078 -- -- --
----------- ----------- ----------- -----------
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 35,804.348 -- -- --
----------- ----------- ----------- -----------
Outstanding at end of period 35,804.348 -- -- --
----------- ----------- ----------- -----------
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received 419,060.685 -- 36,420.039 --
Decrease for surrendered contracts -- -- (87.008) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* (376,660.547) -- 50,338.174 --
----------- ----------- ----------- -----------
Outstanding at end of period 42,400.138 -- 86,671.205 --
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST
EQUITY INDEX
PORTFOLIO
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- -----------
Outstanding at end of period -- --
----------- -----------
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- -----------
Outstanding at end of period -- --
----------- -----------
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- -----------
Outstanding at end of period -- --
----------- -----------
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- --
Increase for payments received 21,871.793 --
Decrease for surrendered contracts (11.015) --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* 43,903.056 --
----------- -----------
Outstanding at end of period 65,763.834 --
----------- -----------
</TABLE>
<PAGE> 97
================================================================================
34 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST ONE GROUP INVESTMENT TRUST
LARGE CAP GROWTH MID CAP VALUE
PORTFOLIO PORTFOLIO
--------------------------------- ---------------------------------
1999 1998 1999 1998
----------- ------------ ------------- ---------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units
(formerly known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- ---------
Outstanding at end of period -- -- -- --
=========== ============ ============= =========
ElitePlus Bonus Enhanced benefit units
(formerly known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- ---------
Outstanding at end of period -- -- -- --
=========== ============ ============= =========
ElitePlus Bonus Annual Step up benefit units
(formerly known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- ---------
Outstanding at end of period -- -- -- --
=========== ============ ============= =========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received 73,778.985 -- 40,034.068 --
Decrease for surrendered contracts (102.504) -- (84.072) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 92,081.051 -- 50,753.973 --
----------- ------------ ------------- ---------
Outstanding at end of period 165,757.532 -- 90,703.969 --
=========== ============ ============= =========
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 98
================================================================================
NOTES TO FINANCIAL STATEMENTS 35
================================================================================
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST ONE GROUP INVESTMENT TRUST
MID CAP GROWTH DIVERSIFIED MID CAP
PORTFOLIO PORTFOLIO
--------------------------------- ---------------------------------
1999 1998 1999 1998
----------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units
(formerly known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- -----------
Outstanding at end of period -- -- -- --
=========== ============ ============= ===========
ElitePlus Bonus Enhanced benefit units
(formerly known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- -----------
Outstanding at end of period -- -- -- --
=========== ============ ============= ===========
ElitePlus Bonus Annual Step up benefit units
(formerly known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
----------- ------------ ------------- -----------
Outstanding at end of period -- -- -- --
=========== ============ ============= ===========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received 23,088.878 -- 9,191.142 --
Decrease for surrendered contracts (34.370) -- (10.632) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 41,250.820 -- 9,577.120 --
----------- ------------ ------------- -----------
Outstanding at end of period 64,305.328 -- 18,757.630 --
=========== ============ ============= ===========
<CAPTION>
ONE GROUP INVESTMENT TRUST
GOVERNMENT BOND
PORTFOLIO
---------------------------------
1999 1998
----------- ------------
<S> <C> <C>
ElitePlus Bonus Standard benefit units
(formerly known as Standard benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- ------------
Outstanding at end of period -- --
=========== ============
ElitePlus Bonus Enhanced benefit units
(formerly known as Enhanced benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- ------------
Outstanding at end of period -- --
=========== ============
ElitePlus Bonus Annual Step up benefit units
(formerly known as Bonus benefit units):
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
----------- ------------
Outstanding at end of period -- --
=========== ============
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- --
Increase for payments received 43,371.119 --
Decrease for surrendered contracts (219.541) --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* 57,858.898 --
----------- ------------
Outstanding at end of period 101,010.476 --
=========== ============
</TABLE>
<PAGE> 99
================================================================================
36 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
ONE GROUP INVESTMENT TRUST ONE GROUP INVESTMENT TRUST
BOND BALANCED
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Increase (decrease) for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
-------------- -------------- -------------- --------------
Outstanding at end of period -- -- -- --
============== ============== ============== ==============
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
-------------- -------------- -------------- --------------
Outstanding at end of period -- -- -- --
============== ============== ============== ==============
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Increase (decrease) for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
-------------- -------------- -------------- --------------
Outstanding at end of period -- -- -- --
============== ============== ============== ==============
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received 43,915.180 -- 22,607.679 --
Decrease for surrendered contracts (214.974) -- (43.598) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 59,848.494 -- 38,192.119 --
-------------- -------------- -------------- --------------
Outstanding at end of period 103,548.700 -- 60,756.200 --
============== ============== ============== ==============
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 100
================================================================================
NOTES TO FINANCIAL STATEMENTS 37
================================================================================
<TABLE>
<CAPTION>
STATE STREET
OCCAT GLOBAL ADVISORS
MANAGED MONEY MARKET
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year -- -- 669,177.195 444,953.990
Increase for payments received 347.840 -- 1,080,353.858 2,252,345.340
Increase (decrease) for surrendered contracts (3,203.820) -- 1,228.374 (156,518.345)
Decrease for death claims -- -- (5,515.120) (860.510)
Change for net inter-portfolio exchanges* 1,797,930.788 -- (1,745,244.307) (1,870,743.280)
-------------- -------------- -------------- --------------
Outstanding at end of period 1,795,074.808 -- -- 669,177.195
============== ============== ============== ==============
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year -- -- 71,388.927 13,476.498
Increase for payments received -- -- 113,005.870 191,874.421
Decrease for surrendered contracts (1,324.050) -- (16,401.040) (1,738.911)
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 155,248.491 -- (167,993.757) (132,223.081)
-------------- -------------- -------------- --------------
Outstanding at end of period 153,924.441 -- -- 71,388.927
============== ============== ============== ==============
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year -- -- 76,341.784 --
Increase for payments received -- -- 172,664.070 78,978.595
Increase (decrease) for surrendered contracts (52.830) -- 196.250 (222.020)
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* 124,428.564 -- (249,202.104) (2,414.791)
-------------- -------------- -------------- --------------
Outstanding at end of period 124,375.734 -- -- 76,341.784
============== ============== ============== ==============
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
-------------- -------------- -------------- --------------
Outstanding at end of period -- -- -- --
============== ============== ============== ==============
<CAPTION>
STATE STREET
GLOBAL ADVISORS
GROWTH EQUITY
PORTFOLIO
-------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 542,282.250 231,208.014
Increase for payments received 31,264.090 78,411.963
Increase (decrease) for surrendered contracts (66,623.950) (32,945.428)
Decrease for death claims (5,211.800) (2,264.258)
Change for net inter-portfolio exchanges* (501,710.590) 267,871.959
-------------- --------------
Outstanding at end of period -- 542,282.250
============== ==============
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year 45,199.956 19,281.533
Increase for payments received 629.570 4,319.872
Decrease for surrendered contracts (17,130.060) (2,391.319)
Decrease for death claims -- --
Change for net inter-portfolio exchanges* (28,699.466) 23,989.870
-------------- --------------
Outstanding at end of period -- 45,199.956
============== ==============
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year 17,008.926 --
Increase for payments received 5,471.700 1,462.659
Increase (decrease) for surrendered contracts (1,011.170) --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* (21,469.456) 15,546.267
-------------- --------------
Outstanding at end of period -- 17,008.926
============== ==============
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
-------------- --------------
Outstanding at end of period -- --
============== ==============
</TABLE>
<PAGE> 101
================================================================================
38 NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE F - NET INCREASE (DECREASE) IN ACCUMULATION UNITS (CONTINUED)
<TABLE>
<CAPTION>
CREDIT SUISSE CREDIT SUISSE
GROWTH INTERNATIONAL
AND INCOME EQUITY
PORTFOLIO PORTFOLIO
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 712,462.456 262,116.126 262,854.312 126,400.020
Increase for payments received 49,825.360 113,762.998 18,967.800 35,652.617
Decrease for surrendered contracts (100,128.250) (41,064.404) (26,715.650) (13,586.483)
Decrease for death claims (13,372.440) (4,130.140) (3,012.850) (213.439)
Change for net inter-portfolio exchanges* (648,787.126) 381,777.876 (252,093.612) 114,601.597
------------ ----------- ------------ -----------
Outstanding at end of period -- 712,462.456 -- 262,854.312
============ =========== ============ ===========
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year 94,362.916 44,598.001 27,231.843 19,510.384
Increase (decrease) for payments received (291.130) 7,845.879 331.650 2,063.685
Increase for surrendered contracts (24,814.070) (2,221.417) (7,012.110) (1,708.901)
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* (69,257.716) 44,140.453 (20,551.383) 7,366.675
------------ ----------- ------------ -----------
Outstanding at end of period -- 94,362.916 -- 27,231.843
============ =========== ============ ===========
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year 25,644.192 -- 2,471.687 --
Increase (decrease) for payments received 14,437.260 4,290.371 3,302.710 517.696
Increase for surrendered contracts (5,284.690) -- (513.300) --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* (34,796.762) 21,353.821 (5,261.097) 1,953.991
------------ ----------- ------------ -----------
Outstanding at end of period -- 25,644.192 -- 2,471.687
============ =========== ============ ===========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
------------ ----------- ------------ -----------
Outstanding at end of period -- -- -- --
============ =========== ============ ===========
</TABLE>
*Includes transfers from (to) AGAIC general account.
<PAGE> 102
================================================================================
NOTES TO FINANCIAL STATEMENTS 39
================================================================================
<TABLE>
<CAPTION>
AMERICAN GENERAL
VAN KAMPEN U.S. GOVERNMENT
EMERGING GROWTH SECURITIES
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 501,049.913 303,011.188 461,727.241 126,832.523
Increase for payments received 31,034.090 58,893.240 13,095.280 110,585.955
Decrease for surrendered contracts (49,637.840) (30,780.520) (98,144.240) (10,034.216)
Decrease for death claims (7,366.120) (9,182.789) (12,546.040) --
Change for net inter-portfolio exchanges* (475,080.043) 179,108.794 (364,132.241) 234,342.979
------------ ----------- ------------ -----------
Outstanding at end of period -- 501,049.913 -- 461,727.241
============ =========== ============ ===========
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year 58,826.233 41,160.908 69,900.862 32,205.189
Increase (decrease) for payments received 3,499.420 2,808.991 (502.840) 13,566.210
Increase for surrendered contracts (12,162.090) (2,435.428) (17,250.670) (4,630.409)
Decrease for death claims -- (3,536.249) -- --
Change for net inter-portfolio exchanges* (50,163.563) 20,828.011 (52,147.352) 28,759.872
------------ ----------- ------------ -----------
Outstanding at end of period -- 58,826.233 -- 69,900.862
============ =========== ============ ===========
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year 12,267.803 -- 11,095.044 --
Increase (decrease) for payments received 3,627.910 4,465.594 504.450 (417.904)
Increase for surrendered contracts (3,110.700) -- (17,163.410) (49.322)
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* (12,785.013) 7,802.209 5,563.916 11,562.270
------------ ----------- ------------ -----------
Outstanding at end of period -- 12,267.803 -- 11,095.044
============ =========== ============ ===========
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- -- -- --
Increase for payments received -- -- -- --
Decrease for surrendered contracts -- -- -- --
Decrease for death claims -- -- -- --
Change for net inter-portfolio exchanges* -- -- -- --
------------ ----------- ------------ -----------
Outstanding at end of period -- -- -- --
============ =========== ============ ===========
<CAPTION>
ELITEVALUE
PORTFOLIO
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
ElitePlus Bonus Standard benefit units (formerly
known as Standard benefit units):
Outstanding at beginning of year 1,100,459.217 461,930.074
Increase for payments received 59,030.900 130,099.937
Decrease for surrendered contracts (131,616.620) (58,416.660)
Decrease for death claims (34,588.470) (13,264.174)
Change for net inter-portfolio exchanges* (993,285.027) 580,110.040
------------- -------------
Outstanding at end of period -- 1,100,459.217
============= =============
ElitePlus Bonus Enhanced benefit units (formerly
known as Enhanced benefit units):
Outstanding at beginning of year 99,776.317 72,104.785
Increase (decrease) for payments received 3,098.020 4,187.580
Increase for surrendered contracts (26,388.350) (13,700.765)
Decrease for death claims -- --
Change for net inter-portfolio exchanges* (76,485.987) 37,184.717
------------- -------------
Outstanding at end of period -- 99,776.317
============= =============
ElitePlus Bonus Annual Step up benefit units (formerly
known as Bonus benefit units):
Outstanding at beginning of year 23,358.578 --
Increase (decrease) for payments received 7,594.640 5,762.382
Increase for surrendered contracts (2,783.950) --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* (28,169.268) 17,596.196
------------- -------------
Outstanding at end of period -- 23,358.578
============= =============
One Multi-Manager Standard benefit units:
Outstanding at beginning of year -- --
Increase for payments received -- --
Decrease for surrendered contracts -- --
Decrease for death claims -- --
Change for net inter-portfolio exchanges* -- --
------------- -------------
Outstanding at end of period -- --
============= =============
</TABLE>
<PAGE> 103
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
AUDITED FINANCIAL STATEMENTS
December 31, 1999
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors................................................1
Balance Sheet.................................................................2
Statement of Income...........................................................3
Statement of Changes in Stockholder's Equity..................................4
Statement of Comprehensive Income.............................................4
Statement of Cash Flows.......................................................5
Notes to Financial Statements.................................................6
</TABLE>
<PAGE> 104
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
American General Annuity Insurance Company
We have audited the accompanying balance sheet of American General
Annuity Insurance Company as of December 31, 1999 and 1998, and the related
statements of income, changes in stockholder's equity, comprehensive income, and
cash flows for the year ended December 31, 1999, the two months ended February
28, 1998, the ten months ended December 31, 1998, and the year ended December
31, 1997. 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 financial position of American General
Annuity Insurance Company at December 31, 1999 and 1998, and the results of its
operations and its cash flows for the year ended December 31, 1999, the two
months ended February 28, 1998, the ten months ended December 31, 1998, and the
year ended December 31, 1997, in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
1
Houston, Texas
February 18, 2000
<PAGE> 105
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
BALANCE SHEET
At December 31
In Millions
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
ASSETS Investments - Notes 2, 8, 9:
Fixed maturity securities
(amortized cost: $15,692 in 1999 and $13,006 in 1998) $ 14,953 $ 13,335
Equity securities (cost: $209 in 1999 and $212 in 1998) 205 216
Mortgage loans on real estate 294 244
Policy loans 80 87
Other long-term invested assets 68 43
Short-term investments - 10
--------- ---------
Total investments 15,600 13,935
--------- ---------
Investment income receivable 239 192
Cash and cash equivalents 160 146
Receivable for securities sold 10 120
Deferred policy acquisition costs - Note 4 569 248
Cost of insurance purchased - Note 5 419 376
Due from reinsurer, net 274 270
Goodwill 867 890
Other assets 19 11
Assets held in Separate Accounts 204 82
--------- ---------
Total assets $ 18,361 $ 16,270
--------- ---------
LIABILITIES Policy reserves for fixed annuity investment contracts $ 16,273 $ 13,574
Payable for securities purchased 20 110
Remittances not allocated 40 20
Other liabilities 40 44
Income tax liabilities - Note 6 80 104
Liabilities related to Separate Accounts 204 82
--------- ---------
Total liabilities 16,657 13,934
--------- ---------
STOCKHOLDER'S Common stock par value $50 per share, 100,000 shares authorized
EQUITY and 50,000 issued and outstanding in 1999 and 1998 - Note 7 3 3
Additional paid-in capital 2,057 1,952
Retained earnings 330 217
Accumulated other comprehensive income - Note 2 (686) 164
--------- ---------
Total stockholder's equity 1,704 2,336
--------- ---------
Total liabilities and stockholder's equity $ 18,361 $ 16,270
--------- ---------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
2
<PAGE> 106
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
STATEMENT OF INCOME
For the Periods Ended
In Millions
<TABLE>
<CAPTION>
Predecessor Basis
------------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DECEMBER 31, December 31, February 28, December 31,
1999 1998 1998 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
REVENUES Premiums and other considerations $ 343 $ 151 $ 14 $ 127
Net investment income - Note 2 1,079 761 133 776
Net realized investment losses - Note 2 (32) (27) (5) (21)
-------- -------- -------- --------
Total revenues 1,390 885 142 882
-------- -------- -------- --------
COSTS AND Policy costs:
EXPENSES Interest credited on investment contracts 661 467 73 426
Insurance policy benefits 128 112 21 109
Change in future policy benefits 303 117 7 114
-------- -------- -------- --------
Total costs 1,092 696 101 649
-------- -------- -------- --------
Expenses:
Amortization of deferred policy
acquisition costs, net - Note 4 24 13 8 43
Amortization of cost of insurance
purchased, net - Note 5 43 34 2 5
Goodwill amortization 23 20 -- --
Other expenses 34 18 2 20
-------- -------- -------- --------
Total expenses 124 85 12 68
-------- -------- -------- --------
Total costs and expenses 1,216 781 113 717
-------- -------- -------- --------
EARNINGS Income before income tax expense 174 104 29 165
Income tax expense - Note 6 61 38 10 55
-------- -------- -------- --------
Net income $ 113 $ 66 $ 19 $ 110
-------- -------- -------- --------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
3
<PAGE> 107
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
For the Periods Ended
In Millions
<TABLE>
<CAPTION>
Predecessor Basis
----------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DECEMBER 31, December 31, February 28, December 31,
1999 1998 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK Balance at beginning and end of year $ 3 $ 3 $ 3 $ 3
------------ ------------ ------------ ------------
ADDITIONAL Balance at beginning of year 1,952 1,781 444 446
PAID-IN-CAPITAL Adjustment for the acquisition -- -- 1,337 --
Capital contribution from stockholder 105 171 -- (2)
------------ ------------ ------------ ------------
Balance at end of year 2,057 1,952 1,781 444
------------ ------------ ------------ ------------
RETAINED Balance at beginning of year 217 151 715 605
EARNINGS Net income 113 66 19 110
Adjustment for the acquisition -- -- (583) --
------------ ------------ ------------ ------------
Balance at end of year 330 217 151 715
------------ ------------ ------------ ------------
ACCUMULATED OTHER Balance at beginning of year 164 61 130 39
COMPREHENSIVE Adjustment for the acquisition -- -- (65) --
INCOME Change in net unrealized
gains (losses) on securities (850) 103 (4) 91
------------ ------------ ------------ ------------
Balance at end of year (686) 164 61 130
------------ ------------ ------------ ------------
STOCKHOLDER'S Balance at end of year $ 1,704 $ 2,336 $ 1,996 $ 1,292
EQUITY ------------ ------------ ------------ ------------
</TABLE>
--------------------------------------------------------------------------------
STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Predecessor Basis
------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DECEMBER 31, December 31, February 28, December 31,
1999 1998 1998 1997
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
COMPREHENSIVE Net income $ 113 $ 66 $ 19 $ 110
INCOME Other comprehensive income (loss)
Gross change in unrealized gains
(losses) on securities (pretax:
($957), $131, ($11), $118) (871) 85 (7) 77
Less: losses realized in
net income - Note 2 (21) (18) (3) (14)
---------- ---------- ---------- ----------
Change in net unrealized
gains (losses) on securities (pretax:
($934), $160, ($6), $140) (850) 103 (4) 91
Adjustment for the acquisition -- -- (65) --
---------- ---------- ---------- ----------
Comprehensive income (loss) $ (737) $ 169 $ (50) $ 201
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
4
<PAGE> 108
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the Periods Ended
In Millions
<TABLE>
<CAPTION>
Predecessor Basis
-------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DECEMBER 31, December 31, February 28, December 31,
1999 1998 1998 1997
------------ ------------ ------------ -==---------
<S> <C> <C> <C> <C> <C>
OPERATING Net Income $ 113 $ 66 $ 19 $ 110
ACTIVITIES Reconciling adjustments to net cash
provided by operating activities:
Insurance and annuity liabilities 1,047 2,414 84 489
Deferred policy acquisition costs (275) (147) (22) (148)
Other, net 129 145 39 37
---------- ---------- ---------- ----------
Net cash provided by operating activities 1,014 2,478 120 488
---------- ---------- ---------- ----------
INVESTMENT Investment purchases (7,310) (7,914) (462) (4,545)
ACTIVITIES Investment calls, maturities and sales 4,530 4,391 289 3,632
Net increase in short-term investments 10 (10) -- --
---------- ---------- ---------- ----------
Net cash used for investing activities (2,770) (3,533) (173) (913)
---------- ---------- ---------- ----------
FINANCING Policyholder account deposits 3,347 2,187 345 1,950
ACTIVITIES Policyholder account withdrawals (1,682) (1,303) (199) (1,440)
Net investment borrowings _ (421) 1 285
Capital contribution from stockholder 105 171 -- --
---------- ---------- ---------- ----------
Net cash provided by financing
activities 1,770 634 147 795
---------- ---------- ---------- ----------
NET CHANGE Net increase (decrease) in cash and
IN CASH cash equivalents 14 (421) 94 370
AND CASH Cash and cash equivalents
EQUIVALENTS at beginning of period 146 567 473 103
---------- ---------- ---------- ----------
Cash and cash equivalents
at end of period $ 160 $ 146 $ 567 $ 473
---------- ---------- ---------- ----------
SUPPLEMENTAL Income taxes paid (refunded), net $ (4) $ 50 $ -- $ 65
CASH FLOW ---------- ---------- ---------- ----------
DISCLOSURE Interest paid on investment borrowings $ 17 $ 30 $ 4 $ 18
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
5
<PAGE> 109
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
All dollar amounts in millions
--------------------------------------------------------------------------------
1
SIGNIFICANT ACCOUNTING POLICIES
1.1 INTRODUCTION
American General Annuity Insurance Company (the "Company") is a State of
Texas domiciled life insurance company that was founded in 1944. The Company is
a wholly-owned subsidiary of Western National Corporation ("Western National").
On December 23, 1994, AGC Life Insurance Company ("AGC Life"), a
Missouri-domiciled life insurer, purchased a 40% ownership interest in Western
National's common stock. AGC Life is a wholly-owned subsidiary of American
General Corporation, ("AGC"), a Texas corporation. References to "American
General" are references to AGC and its direct and indirect majority controlled
subsidiaries. As of December 31, 1996, American General owned approximately a
46% equity interest in Western National. The increase in American General's
equity interest was the result of Western National issuing preferred stock to
American General in September 1996. On February 25, 1998, with the approval of
the Texas Department of Insurance and the shareholders of Western National,
American General acquired the remaining 54% of the outstanding common stock of
Western National for consideration valued at approximately $1.2 billion. For
accounting purposes, the acquisition was effective as of February 28, 1998 and
was accounted for using the purchase method of accounting in accordance with the
provisions of Accounting Principles Board Opinion 16, "Business Combinations",
and other existing accounting literature pertaining to purchase accounting.
Under purchase accounting, the total purchase cost was allocated to the assets
and liabilities acquired based on a determination of their fair value as of the
effective date of the acquisition, and resulted in goodwill of $918.5 million,
which is being amortized on a straight line basis over 40 years. We regularly
review goodwill for indicators of impairment in value which we believe are other
than temporary, including unexpected or adverse changes in the following: (1)
the economic or competitive environments in which the company operates, (2)
profitability analyses, and (3) cash flow analyses. The Company's balance sheet
at December 31, 1999 and 1998, and the related statements of operations,
shareholder's equity, comprehensive income, and cash flows for the year ended
December 31, 1999, and the ten month period ended December 31, 1998, are
reported under the purchase method of accounting and, accordingly, are not
consistent with the basis of presentation of the previous periods' financial
statements ("predecessor basis").
The Company develops, markets, and issues annuity products through niche
distribution channels. The Company sells deferred annuities, including its
proprietary fixed annuities, to the savings and retirement markets through
financial institutions (primarily banks and thrifts), and sells deferred
annuities to both tax-qualified and nonqualified retirement markets through
personal producing general agents ("PPGAs"). The Company also sells deferred
annuities through its direct sales operations. The Company also sells SPIAs
(other than structured settlement SPIAs) through its financial institution and
PPGA distribution channels. The Company also sells variable annuity products.
1.2 PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP).
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 these estimates.
Prior year amounts have been restated to conform with the current year
presentation.
1.3 ACCOUNTING CHANGES
COMPREHENSIVE INCOME. During 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and displaying comprehensive income
and its components in the financial statements. The Company elected to report
comprehensive income and its components in a separate statement of
comprehensive income. Adoption of this statement did not change recognition or
measurement of net income and, therefore, did not impact the Company's results
of operations or financial position.
DERIVATIVES. In June 1998, the Financial Accounting Standards Board issued
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which
requires all derivative instruments to be recognized at fair value as either
assets or liabilities in the balance sheet. Changes in the fair value of a
derivative instrument are to be reported as earnings or other comprehensive
income, depending upon the intended use of the derivative instrument. We will
adopt SFAS 133 on January 1, 2001. Adoption of SFAS 133 is not expected to have
a material impact on the Company's results of operations or financial position.
1.4 Investments
FIXED MATURITY AND EQUITY SECURITIES. At year end, all fixed maturity and
equity securities are classified as available-for-sale and recorded at fair
value. 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 stockholder's 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.
Beginning in 1998, the Company maintained a trading portfolio of certain
fixed maturity securities. Trading securities are recorded at fair value.
Unrealized gains (losses), as well as realized gains (losses), are included in
net investment income.
--------------------------------------------------------------------------------
6
<PAGE> 110
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
The Company held no trading securities at December 31, 1999 or 1998, and trading
securities did not have a material effect on net investment income in 1999 or
1998.
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 reported at the lower of amortized cost or
fair value of the underlying collateral, less estimated costs to sell.
POLICY LOANS. Policy loans are reported at unpaid principal balance.
INVESTMENT INCOME. Interest on fixed maturity securities and performing
mortgage loans is recorded as income when earned and is adjusted for any
amortization of premium or discount. Interest on delinquent mortgage loans is
recorded as income when received. Dividends are recorded as income on
ex-dividend dates.
Income on mortgage-backed securities is recognized using a constant
effective yield based on estimated prepayments of the underlying mortgages. If
actual prepayments differ from estimated prepayments, a new effective yield is
calculated and the net investment in the security is adjusted accordingly. The
adjustment is recognized in net investment income.
REALIZED INVESTMENT GAINS (LOSSES). Realized investment gains (losses) are
recognized using the specific identification method.
1.5 DERIVATIVES RELATED TO INVESTMENTS
The Company's use of derivative financial instruments is generally limited
to interest rate and currency swap agreements, and options to enter into
interest rate swap agreements (call and put swaptions). The Company accounts for
its derivative financial instruments as hedges.
INTEREST RATE AND CURRENCY SWAP AGREEMENTS. Interest rate swap agreements
are used to convert specific investment securities from a floating-rate to a
fixed-rate basis, or vice versa and hedge against the risk of declining interest
rates on anticipated security purchases. Currency swap agreements are used to
convert cash flows from specific investment securities denominated in foreign
currencies into U.S. dollars at specified exchange rates, and to hedge against
currency rate fluctuations on anticipated security purchases.
The difference between amounts paid and received on swap agreements is
recorded on an accrual basis as an adjustment to 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 balance sheet if
they hedge investments carried at fair value or if they hedge anticipated
purchases of such investments. In this event, changes in the fair value of these
swap agreements are reported in accumulated other comprehensive income (loss)
included in stockholder's equity, consistent with the treatment of the related
investment security.
For swap agreements hedging anticipated investment purchases, 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. If the underlying investment
is extinguished or sold, any related gain or loss on swap agreements is
recognized in income.
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 prolonged periods of decreasing interest rates, the spread between
investment yields and interest crediting rates may be reduced as a result of
minimum rate guarantees on certain insurance and annuity contracts, which limit
the Company's ability to reduce interest crediting rates. Call swaptions, which
allow the Company to enter into interest rate swap agreements to receive fixed
rates and pay lower floating rates, effectively maintain the spread between
investment yields and interest crediting rates during such periods.
During prolonged periods of increasing interest rates, the spread between
investment yields and interest crediting rates may be reduced as a result of the
Company's decision to increase interest crediting rates to limit surrenders. Put
swaptions, which allow the Company to enter into interest rate swap agreements
to pay fixed rates and receive higher floating rates, effectively maintain the
spread between investment yields and interest crediting rates during such
periods.
Premiums paid to purchase swaptions are included in investments and are
amortized to net investment income over the exercise period of the swaptions. If
a swaption is terminated, any gain or loss is reported as investment income. If
a swaption ceases to be an effective hedge, any gain or loss is recognized in
income.
1.6 DEFERRED POLICY ACQUISITION COSTS (DPAC)
Certain costs of writing an insurance policy, including commissions,
underwriting and marketing expenses, are deferred and reported as DPAC. DPAC is
charged to expense in relation to the estimated gross profits of the insurance
contracts, including realized gains (losses).
--------------------------------------------------------------------------------
7
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AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
DPAC is 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 (loss) within stockholder's equity.
The Company reviews the carrying value of DPAC on at least an annual basis.
Management considers estimated future gross profit margins as well as expected
mortality, interest earned and credited rates, persistency, and expenses in
determining whether the carrying amount is recoverable. Any amounts deemed
unrecoverable are charged to expense.
1.7 COST OF INSURANCE PURCHASED (CIP)
The cost assigned to certain acquired insurance contracts in force at the
acquisition date is reported as CIP. Interest is accreted on the unamortized
balance of CIP at rates of 4.0% to 7.4%. CIP is charged to expense and adjusted
for the impact of net unrealized gains (losses) on securities in the same manner
as DPAC. We review the carrying amount of CIP on at least an annual basis using
the same methods used to evaluate DPAC.
1.8 SEPARATE ACCOUNTS
Separate Accounts are assets and liabilities associated with certain
contracts, principally annuities, for which the investment risk lies
predominantly with the holder of the contract. The 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 statements of income and cash flows.
Assets held in the Separate Accounts are primarily shares in mutual funds, which
are carried at fair value, based on the quoted net asset value per share.
In December 1999, total capital ("seed money") within the AG Separate
Account A of $17.2 million was distributed back to the Company. The distribution
included the Company's $9.6 million return of seed money and related dividends
and realized gains of $2.4 million and $5.2 million respectively.
1.9 POLICY RESERVES
Reserves for universal life-type and investment-type contracts are based on
the contract account balance, if future benefit payments in excess of the
account balance are not guaranteed, or on the present value of future benefit
payments when such payments are guaranteed.
For investment contracts without mortality risk (such as deferred annuities
and immediate annuities with benefits paid for a period certain) and for
contracts that permit the Company or the insured to make changes in the contract
terms (such as single premium whole life and universal life), premium deposits
and benefit payments are recorded as increases or decreases in a liability
account rather than as revenue and expense. Amounts charged against the
liability account for the cost of insurance, policy administration and surrender
penalties are recorded as revenues. Interest credited to the liability account
and benefit payments made in excess of the contract liability account balance
are charged to expense.
Reserves for traditional and limited-payment contracts are generally
calculated using the net level premium method and assumptions as to investment
yields, mortality, withdrawals, and dividends. The assumptions are based on
projections of past experience and include provisions for possible adverse
deviation. These assumptions are made at the time the contract is issued or, in
the case of contracts acquired by purchase, at the purchase date.
Liabilities for incurred claims are determined using historical experience
and represent an estimate of the present value of the ultimate net cost of all
reported and unreported claims. Management believes these estimates are
adequate. Such estimates are periodically reviewed and any adjustments are
reflected in current operations.
1.10 RECOGNITION OF REVENUES AND COSTS
For traditional insurance contracts, premiums are recognized as income when
due. Benefits and expenses are associated with earned premiums so as to result
in their recognition over the premium-paying period of the contracts. Such
recognition is accomplished through the provision for future policy benefits and
the amortization of deferred policy acquisition costs.
For contracts with mortality risk, but with premiums paid for only a
limited period (such as single premium immediate annuities with benefits paid
for the life of the annuitant), the accounting treatment is similar to
traditional contracts. However, the excess of the gross premium over the net
premium is deferred and recognized in relation to the present value of expected
future benefit payments.
1.11 INCOME TAXES
The Company files a separate life insurance tax return. Deferred income
taxes are provided for the future tax effects of temporary differences between
the tax basis of assets and liabilities and their financial reporting amounts,
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. The Company provides a valuation allowance,
if necessary, to reduce deferred tax assets, if any, to their estimated
realizable value.
Any increase or decrease in a valuation allowance that results from a
change in circumstances that causes a change in judgement above the
realizability of the related deferred tax asset is included in income. Any
change in a valuation allowance related to fluctuations in fair value of
available-for-sale securities is included in accumulated other comprehensive
income (loss) in shareholder's equity.
--------------------------------------------------------------------------------
8
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AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
1.12 STATUTORY ACCOUNTING
State insurance laws and regulations prescribe accounting practices for
calculating statutory net income and equity (capital and surplus) that differ
from GAAP. Significant differences were as follows:
<TABLE>
<CAPTION>
Predecessor Basis
--------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Net Income:
Statutory net gain
from operations $ 72 $ 70 $ 24 $ 76
Deferred policy
acquisition costs and cost
of insurance purchased 208 110 13 103
Income taxes (35) (10) (3) (9)
Policy reserves adjustment (69) (58) (13) (58)
Goodwill amortization (23) (20) -- --
Net realized gain/investments (35) (34) (1) (2)
Other net (5) 8 (1) --
-------- ---------- ---------- --------
GAAP net income $ 113 $ 66 $ 19 $ 110
-------- ---------- ---------- --------
Shareholder's equity:
Statutory capital & surplus $ 973 $ 823 $ 663 $ 639
Deferred policy
acquisition costs and cost
of insurance purchased 988 624 426 426
Income taxes (95) (129) (155) (156)
Policy reserves adjustment (563) (484) (207) (195)
Acquisition-related goodwill 867 890 -- --
Asset valuation reserve 159 136 116 116
Interest maintenance reserve 79 100 105 105
Investments (667) 435 357 376
Adjustments for acquisition -- -- 689 --
Other net (37) (59) 2 (19)
-------- ---------- ---------- --------
Total GAAP shareholder's
equity $ 1,704 $ 2,336 $ 1,996 $ 1,292
-------- ---------- ---------- --------
</TABLE>
1.13 COINSURANCE TRANSACTION
On May 21, 1998, the Company acquired the in-force individual and tax
sheltered annuity business of Provident Companies, Inc., a Delaware corporation,
for approximately $27 million. Under the agreement, approximately $1.7 billion
of assets and insurance liabilities were assumed by the Company under a
coinsurance arrangement and resulted in cost of insurance purchased of $59.8
million. In addition, the results of operations associated with this transaction
have been included in the accompanying financial statements from the effective
date through December 31, 1998 and for the year ended December 31, 1999. This
transaction was effective as of April 30, 1998.
2
INVESTMENTS
2.1 INVESTMENT INCOME
Income by type of investment was as follows:
<TABLE>
<CAPTION>
Predecessor Basis
---------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturity securities $ 1,020 $ 706 $ 122 $ 721
Mortgage loans on
real estate 21 15 3 18
Equity securities 16 13 3 13
Other 36 38 6 30
-------- ---------- ---------- --------
Gross investment income 1,093 772 134 782
Investment expense (14) (11) (1) (6)
-------- ---------- ---------- --------
Net investment income $ 1,079 $ 761 $ 133 $ 776
-------- ---------- ---------- --------
</TABLE>
Derivative financial instruments related to investment securities did not
have a material effect on net investment income in any of the periods ended.
The Company had non-performing investments of less than .01% for 1999, and
had no non-performing investments in 1998.
2.2 REALIZED INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
Predecessor Basis
----------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturity securities
Gross gains $ 22 $ 20 $ 6 $ 30
Gross losses (70) (38) (10) (47)
-------- ---------- ---------- --------
Total fixed maturity
securities (48) (18) (4) (17)
-------- ---------- ---------- --------
Equity securities
Gross gains 6 -- -- --
Gross losses -- -- -- --
-------- ---------- ---------- --------
Total equity securities 6 -- -- --
-------- ---------- ---------- --------
Other long-term investments -- -- -- 1
DPAC/CIP amortization and
investment expense, net 10 (9) (1) (5)
-------- ---------- ---------- --------
Realized investment gains
(losses) before taxes (32) (27) (5) (21)
Income tax expense (benefit) (11) (9) (2) (7)
-------- ---------- ---------- --------
Net realized investment
gains (losses) $ (21) $ (18) $ (3) $ (14)
-------- ---------- ---------- --------
</TABLE>
--------------------------------------------------------------------------------
9
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AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
2.3 CASH FLOWS FROM INVESTING ACTIVITIES
Uses of cash for investment purchases were as follows:
<TABLE>
<CAPTION>
Predecessor Basis
----------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturity securities $ 7,177 $ 6,108 $ 440 $ 4,485
Provident -- 1,621 -- --
Other 133 195 22 60
-------- ---------- ---------- --------
Total $ 7,310 $ 7,924 $ 462 $ 4,545
-------- ---------- ---------- --------
</TABLE>
Sources of cash from investment dispositions and repayments were as
follows:
<TABLE>
<CAPTION>
Predecessor Basis
----------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Fixed maturity securities $ 4,453 $ 4,357 $ 286 $ 3,624
Other 87 34 3 8
-------- ---------- ---------- --------
Total $ 4,540 $ 4,391 $ 289 $ 3,632
-------- ---------- ---------- --------
</TABLE>
2.4 FIXED MATURITY AND EQUITY SECURITIES-
MATURITIES. The contractual maturities of fixed maturity securities at
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- ---------
<S> <C> <C>
Fixed maturity securities, excluding
mortgage-backed securities, due
In one year or less $ 97 $ 100
In years two through five 1,661 1,626
In years six through ten 5,422 5,119
After ten years 4,786 4,498
Mortgage-backed securities 3,726 3,610
--------- ---------
Total fixed maturity securities $ 15,692 $ 14,953
--------- ---------
</TABLE>
Actual maturities may differ from contractual maturities since borrowers
may have the right to call or prepay obligations. Corporate requirements and
investment strategies may result in the sale of investments before maturity.
2.4 FIXED MATURITY AND EQUITY SECURITIES (CONTINUED)
VALUATION. Amortized cost and fair value of fixed maturity and equity
securities at December 31 were as follows:
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
------------------- ---------------------- ----------------------- --------------------
1999 1998 1999 1998 1999 1998 1999 1998
-------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Corporate securities $ 11,724 $ 9,054 $ 25 $ 353 $ 636 $ 94 $ 11,113 $ 9,313
Mortgage-backed securities 3,726 3,578 5 63 121 7 3,610 3,634
Affiliated fixed maturity securities -- 100 -- -- -- -- -- 100
Obligations of states and
political subdivisions 95 83 1 6 6 -- 90 89
Debt securities issued by
foreign governments 74 76 1 6 2 -- 73 82
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 52 96 -- 2 3 -- 49 98
Redeemable preferred stock 21 19 -- -- 3 -- 18 19
-------- --------- --------- --------- --------- --------- --------- ---------
Total fixed maturity securities $ 15,692 $ 13,006 $ 32 $ 430 $ 771 $ 101 $ 14,953 $ 13,335
-------- --------- --------- --------- --------- --------- --------- ---------
Equity securities $ 209 $ 212 $ -- $ 4 $ 4 $ -- $ 205 $ 216
-------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
--------------------------------------------------------------------------------
10
<PAGE> 114
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
2.5 NET UNREALIZED GAINS (LOSSES) ON SECURITIES
Net unrealized gains (losses) on fixed maturity and equity securities
included in accumulated other comprehensive income (loss) at December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Gross unrealized gains $ 32 $ 434
Gross unrealized losses (775) (101)
DPAC/CIP adjustments 61 (81)
Deferred federal income taxes (4) (88)
------ ------
Net unrealized gains (losses) on securities $ (686) $ 164
------ ------
</TABLE>
2.6 MORTGAGE LOANS ON REAL ESTATE
DIVERSIFICATION. 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.
At December 31, the mortgage loan portfolio was distributed as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Geographic distribution:
Atlantic $ 158 $ 157
Central 78 69
Pacific and Mountain 58 18
------ ------
Total mortgage loans $ 294 $ 244
------ ------
Property type:
Retail $ 223 $ 226
Office 53 14
Industrial 17 2
Residential and other 1 2
------ ------
Total mortgage loans $ 294 $ 244
------ ------
</TABLE>
There were no impaired loans and the allowance was immaterial for both 1999
and 1998.
3
REINSURANCE
In the normal course of business, the Company seeks to limit its exposure
to loss on any single policy and to recover a portion of benefits paid by ceding
reinsurance to other insurance enterprises or reinsurers under excess coverage
contracts. The Company has set its retention limit for acceptance of risk on
life insurance policies at various levels up to $0.8 million. To the extent that
reinsuring companies are unable to meet obligations under these agreements, the
Company remains contingently liable. The company evaluates the financial
condition of its reinsurers to minimize its exposure to significant losses from
reinsurer insolvencies. Assets and liabilities relating to reinsurance contracts
are reported gross of the effects of reinsurance. Reinsurance receivables and
prepaid reinsurance premiums, including amounts related to insurance
liabilities, are reported as assets.
Direct and assumed life insurance in force totaled $403.2 million, $444.5
million, and $495.8 million at December 31, 1999, 1998, and 1997, respectively
and ceded life insurance in force totaled $168.3 million, $195.6 million, and
$212.8 million at December 31, 1999, 1998, and 1997, respectively. The
percentage of assumed to net is less than 1% for all periods presented.
The reinsurance cost of ceded policies containing mortality risks totaled
$1.1 million in 1999, $1.3 million in 1998, and $1.2 million in 1997, and was
deducted from insurance premium revenue. Reinsurance recoveries netted against
insurance policy benefits totaled $0.2 million, $0.4 million, and $1.5 million
in 1999, 1998, and 1997, respectively.
In October 1995, the Company and American General Life Insurance Company
("AG Life") entered into a modified coinsurance agreement. Under the agreement,
AG Life issues SPIAs, and 50% of each risk is reinsured to the Company. Under
this arrangement, the Company reports its pro rata share of premiums and shares
in its pro rata portion of the gain or loss on policies sold. Pursuant to this
arrangement, the Company assumed premiums of $2.2 million, $51.7 million, and
$126.3 million for the years ended December 31, 1999, 1998, and 1997,
respectively. The arrangement resulted in $2.3 million, $52.0 million, and
$126.8 million of revenues for the Company in 1999, 1998, and 1997,
respectively. As of December 31, 1999, 1998, and 1997, the funds held by the
Company and the insurance liabilities resulting from this agreement were $272.7
million, $269.4 million, and $219.5 million, respectively.
4
DEFERRED POLICY ACQUISITION COSTS (DPAC)
Activity in DPAC was as follows:
<TABLE>
<CAPTION>
Predecessor Basis
------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at January 1 $ 248 $ 147 $ 517 $ 408
Deferrals:
Acquisition cost incurred 275 147 22 148
Accretion of interest 24 11 5 20
Amortization:
Adjustment for the
acquisition (a) -- -- (385) --
Operating earnings (48) (24) (13) (63)
Effect of net realized
(gains) losses on securities 5 (1) 1 4
Effect of net unrealized
(gains) losses on securities 65 (32) -- (99)
---------- ---------- ---------- ----------
Balance at end of period $ 569 $ 248 $ 147 $ 418
---------- ---------- ---------- ----------
</TABLE>
(a) Represents the necessary elimination of the historical DPAC asset required
by purchase accounting
--------------------------------------------------------------------------------
11
<PAGE> 115
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
5
COST OF INSURANCE PURCHASED (CIP)
Activity in CIP was as follows:
<TABLE>
<CAPTION>
Predecessor Basis
------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at January 1 $ 376 $ 401 $ 8 $ 72
Additions from acquisitions 60
Adjustment for the
acquisition(a) -- -- 335 --
Accretion of interest 22 18 1 2
Amortization (65) (52) (3) (7)
Effect of net realized
(gains) loss on securities 9 (2) 1 --
Effect of net unrealized
(gain) loss on securities 77 (49) (63) (59)
---------- ---------- ---------- ----------
Balance at end of period $ 419 $ 376 $ 279 $ 8
---------- ---------- ---------- ----------
</TABLE>
(a) Represents the incremental amount necessary to recognize the new CIP asset
attributable to the 1998 acquisition.
CIP amortization, net of accretion, expected to be recorded in each of the
next five years is $41.9 million, $40.2 million, $37.6 million, $34.4 million,
and $31.2 million.
6
INCOME TAXES
6.1 TAX LIABILITIES
Components of income tax liabilities and assets at December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Current tax liabilities (assets) $ (18) $ (28)
------ ------
Deferred tax liabilities, applicable to:
Basis differential of investments -- 147
DPAC and CIP 287 176
Other -- 6
------ ------
Total deferred tax liabilities 287 329
------ ------
Deferred tax assets, applicable to:
Basis differential of investments 216 --
Policy reserves 214 197
Other 1 --
------ ------
Gross deferred tax assets 431 197
------ ------
Valuation allowance 242 --
Net deferred tax liabilities 98 132
------ ------
Total income tax liabilities $ 80 $ 104
------ ------
</TABLE>
The 1999 deferred tax asset applicable to basis differential of investments
was due to unrealized losses on securities. Since a portion of this deferred tax
asset may not be realized, a valuation allowance of $242.0 million was provided
at December 31, 1999. This valuation allowance had no income statement impact.
6.2 TAX EXPENSE
Components of income tax expense were as follows:
<TABLE>
<CAPTION>
Predecessor Basis
------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Current:
Federal $ 6 $ 32 $ 7 $ 45
State -- 1 -- 1
---------- ---------- ---------- ----------
Total current income
tax expense 6 33 7 46
---------- ---------- ---------- ----------
Total deferred income
tax expense 55 5 3 9
---------- ---------- ---------- ----------
Income tax expense $ 61 $ 38 $ 10 $ 55
---------- ---------- ---------- ----------
</TABLE>
A reconciliation between the federal income tax rate and the effective tax
rate follows:
<TABLE>
<CAPTION>
Predecessor Basis
------------------------
YEAR Ten Months Two Months Year
ENDED Ended Ended Ended
DEC. 31, Dec. 31, Feb. 28, Dec. 31,
1999 1998 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Federal income tax rate 35% 35% 35% 35%
Income tax expense at
applicable rate $ 63 $ 31 $ 10 $ 57
Amortization of
goodwill 8 7 -- --
State income taxes -- 1 -- 1
Other items (10) (1) -- (3)
---------- ---------- ---------- ----------
Income tax expense $ 61 $ 38 $ 10 $ 55
---------- ---------- ---------- ----------
</TABLE>
7
CAPITAL STOCK
The Company has one class of capital stock: common stock ($50.00 par value
with 100,000 shares authorized and 50,000 shares issued and outstanding).
The Company is restricted by state insurance laws as to the amount it may
pay as dividends without prior approval from the Texas Department of Insurance.
The maximum dividend payout which may be made without prior approval in 2000 is
$97 million.
--------------------------------------------------------------------------------
12
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AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
8
DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate and currency swap agreements related to investment securities
at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Interest rate swap agreements
to pay fixed rate
Notional amount $ 55 $ 55
Average receive rate 7.64% 6.73%
Average pay rate 6.88 6.88
---------- ----------
Interest rate swap agreements
to receive fixed rate
Notional amount $ -- $ 80
Average receive rate --% 6.73%
Average pay rate -- 5.31
---------- ----------
</TABLE>
During 1999, the Company purchased call swaptions and put swaptions that
expire by 2000. The call swaptions outstanding at December 31, 1999, had a
notional amount of $2.1 billion and strike prices ranging from 3.5% to 5.0%. The
put swaptions outstanding at December 31, 1999, had a notional amount of $1.5
billion and strike prices ranging from 8.0% to 9.5%. Should the strike prices
remain below market rates for call swaptions and above market rates for put
swaptions, the swaptions will expire, and the Company's exposure would be
limited to the premiums paid. These premiums were immaterial.
CREDIT AND MARKET RISK. Derivative financial instruments expose the Company
to credit risk in the event of nonperformance 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, nonperformance
would not have a material impact on the Company's results of operations and
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.
9
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
revaluation of related policyholder liabilities can be misinterpreted.
<TABLE>
<CAPTION>
1999 1998
------------------------ ------------------------
FAIR CARRYING Fair Carrying
VALUE AMOUNT Value Amount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Fixed maturity $ 14,953* $ 14,953* $ 13,335* $ 13,335*
Equity securities 205 205 216 216
Mortgage loans on
real estate 281 294 249 244
Policy loans 69 80 78 87
Assets related to
Separate accounts 204 204 82 82
Liabilities
Insurance investment
contracts $ 13,277 $ 14,095 $ 10,933 $ 11,751
Liabilities related to
Separate accounts 204 204 82 82
---------- ---------- ---------- ----------
</TABLE>
* Includes derivative financial instruments with a fair value of $4.9 million
in 1999 and $1.2 million in 1998.
The following methods and assumptions were used to estimate the fair values
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 the 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.
ASSETS AND LIABILITIES RELATED TO SEPARATE ACCOUNTS. Fair values of assets
and liabilities related to Separate accounts were based on quoted net asset
value per share of the underlying mutual funds.
INSURANCE INVESTMENT CONTRACTS. Fair value of insurance investment
contracts was estimated using cash flows discounted at market interest rates.
--------------------------------------------------------------------------------
13
<PAGE> 117
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
10
TRANSACTIONS WITH AFFILIATED COMPANIES
In the ordinary course of business, the Company is occasionally involved in
transactions with affiliated companies. Transactions involving the purchase or
disposal of securities are consummated at the market value of the security on
the date of the transaction. Transactions with affiliated companies during each
of the three years in the period ended December 31, 1999 were as follows:
Operating expenses include $4.4 million in 1999 and $2.0 million in 1998,
for amounts paid to AGC or its subsidiaries primarily for rent, data processing
services, and use of facilities. There were no expenses in 1997.
Investment expenses include $12.3 million in 1999 and $10.4 million in 1998
for the performance of various services by American General Investment
Management (AGIM). There were no expenses in 1997.
Commission expense includes $0.8 million in 1999 for payments to American
General Life & Accident for their "cross-selling" of the Company products. There
were no payments in prior years as these efforts were not initiated until 1999.
Commission expense also includes $7.7 million, $8.8 million, and $1.7 million
for 1999, 1998, and 1997, respectively for payments made to WNL Brokerage
Services, Inc. (renamed American General Distributors, Inc. in 1999), an
affiliated broker-dealer, for distributing the Company's variable products.
The payable processing function for the Company is being performed by The
Variable Annuity Life Insurance Company (VALIC) - an American General affiliate
company.
The Company received a $100.0 million variable rate senior promissory note
issued by AGC in September, 1998. Interest was received at a rate per annum
equal to the sum of 1-month LIBOR plus 0.2%. Interest earned totaled $3.2
million in 1999 and $1.4 million in 1998. The note was paid off in 1999 with
payments of $16.0 million in March, $20.0 million in June, and the remaining
$64.0 million in September.
The Company holds 190,000 shares of preferred stock in American General
Annuity Investment Advisory Services (AGAIAS) with a statement value of $190.0
million. The Company received preferred stock dividends from AGAIAS of $14.3
million, $14.3 million, and $12.2 million in 1999, 1998, and 1997, respectively.
The Company paid no dividends to its parent company in 1999, 1998, or 1997.
The Company received capital contributions of $100.0 million in 1999 and
$158.8 million in 1998 from AGC Life. Additionally, the Company received capital
contributions of $5.0 million in 1999 and $12.0 million in 1998 from Western
National. The Company did not receive any capital contributions from affiliated
companies during 1997.
11
COMMITMENTS AND CONTINGENCIES
The Company is a defendant in various lawsuits arising in the normal course
of business. The Company believes it has valid defenses in these lawsuits and is
defending the cases vigorously. The Company also believes that the total amounts
that would ultimately have to be paid arising from these lawsuits would have no
material effect on its consolidated financial position.
Assessments are levied on the Company from time to time by guaranty fund
associations of states in which it is licensed to provide for payment of covered
claims or to meet other insurance obligations, subject to prescribed limits, of
insolvent insurance enterprises. Assessments are allocated to an insurer, based
on the ratio of premiums written by an insurer to total premiums written in the
state. The terms of the assessments depend on how each guaranty fund association
elects to fund its obligations. Assessments levied by certain states may be
recoverable through a reduction in future premium taxes. The Company provides a
liability, and estimates premium tax offsets, for estimated future assessments
of known insolvencies. Included in other liabilities is a reserve for guaranty
fund assessments of $14.6 million, $11.2 million, and $16.6 million in 1999,
1998, and 1997, respectively. The Company determines guaranty fund liabilities
by utilizing a report prepared annually by the National Organization of Life and
Health Insurance Guaranty Associations which provides estimates of assessments
by insolvency. Management believes the provision for guaranty fund assessments
is adequate for all known insolvencies, and does not currently anticipate the
need for any material additions to the reserve for known insolvencies. However,
it is reasonably possible that the estimates on which the provision is based
will change and that such changes will result in future adjustments.
--------------------------------------------------------------------------------
14
<PAGE> 118
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
--------------------------------------------------------------------------------
12
EMPLOYEE BENEFIT PLANS
The Company participates in several employee benefit plans which together
cover substantially all of its employees. The amounts related to the pension
plans were not significant to the Company operations.
13
IMPACT OF YEAR 2000 (UNAUDITED)
As of February 18, 2000, all of the Company's major technology systems,
programs, and applications, including those which rely on third parties, are
operating smoothly following the transition into 2000. The Company has not
experienced any interruptions to normal business operations, including the
processing of customer account data and transactions. The Company will continue
to monitor the technology systems, including critical third party dependencies,
as necessary to maintain Year 2000 readiness.
Through December 31, 1999, the Company incurred and expensed pretax costs
of $1.9 million related to Year 2000 readiness, including $0.9 million in 1999
and $1.0 million in 1998. The Company does not anticipate incurring any
significant cost in the future to maintain Year 2000 readiness.
The Company does not expect to have any future disruptions. However, if
they occur, it is anticipated that they will not have a material effect on the
company's results of operations, liquidity, or financial condition.
--------------------------------------------------------------------------------
15
<PAGE> 119
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of the Separate Account and the Company are
included in Part B hereof.
B. EXHIBITS
<TABLE>
<C> <S>
1. -- Resolution of Board of Directors of the Company
authorizing the establishment of the Separate
Account.****
2. -- Not applicable.
3. -- Principal Underwriter's Agreement.****
4. -- Form of Individual Fixed and Variable Deferred Annuity
Contract. (Filed herewith)
5. -- Form of Application Form. (Filed herewith)
6. -- (i) Copy of Amended and Restated Articles of
Incorporation of the Company.*
-- (ii) Copy of the Restated Bylaws of the Company.*
7. -- Not applicable.
8. -- (i)(A) Participation Agreement between AIM Variable
Insurance Funds, A I M Distributors, Inc., American
General Distributors, Inc. and American General
Annuity Insurance Company.****
-- (i)(B) Form of Administrative Services Agreement
between American General Annuity Insurance Company and
A I M Advisors, Inc.*******
-- (i)(C) Form of Amendment No. 2 to Participation Agreement
between AIM Variable Insurance Funds, A I M
Distributors, Inc., American General Distributors,
Inc. and American General Annuity Insurance
Company. (Filed herewith)
-- (ii)(A) Participation Agreement between Oppenheimer
Variable Account Funds, OppenheimerFunds, Inc. and
American General Annuity Insurance Company.****
-- (ii)(B) Form of Administrative Services Agreement between
American General Annuity Insurance Company and
OppenheimerFunds, Inc.*******
-- (iii)(A) Form of Participation Agreement between Franklin
Templeton Variable Insurance Products Trust, Franklin
Templeton Distributors, Inc. and American General
Annuity Insurance Company, dated May 1, 2000.*******
-- (iii)(B) Form of Administrative Services Agreement between
American General Annuity Insurance Company and
Franklin Templeton Services, Inc.*******
-- (iii)(C) Form of First Amendment to Participation Agreement
between Franklin Templeton Variable Insurance Products
Trust, Franklin Templeton Distributors, Inc. and
American General Annuity Insurance Company. (Filed
herewith)
-- (iii)(D) Form of First Amendment to Administrative Services
Agreement between American General Annuity Insurance
Company and Franklin Templeton Services, Inc. (Filed
herewith)
-- (iv)(A) First Amendment to Participation Agreement Among
Oppenheimer Variable Account Funds, OppenheimerFunds,
Inc. and American General Annuity Insurance Company.
****
-- (iv)(B) Form of Third Amendment to Participation Agreement
among Oppenheimer Variable Account Funds,
OppenheimerFunds, Inc. and American General Annuity
Insurance Company. (Filed herewith)
-- (v)(A) Form of Amendment No. 1 to Participation Agreement
between American General Annuity Insurance Company,
Van Kampen Life Investment Trust, Van Kampen Funds
Inc., and Van Kampen Asset Management Inc.*****
-- (v)(B) Form of Administrative Services Agreement between
American General Annuity Insurance Company and Van
Kampen Asset Management Inc.*******
-- (vi) Participation Agreement between American General
Annuity Insurance Company, Van Kampen Life Investment Trust,
Van Kampen Funds Inc., and Van Kampen Asset Management Inc.
dated November 23, 1998.*****
-- (vii) Form of Participation Agreement between American
General Annuity Insurance Company, American General
Series Portfolio Company and The Variable Annuity
Life Insurance Company.*****
-- (viii) Form of Participation Agreement among American
General Annuity Insurance Company, OpCap Advisors and OCC
Accumulation Trust.******
9. -- Not Applicable.
10. -- Consent of Independent Auditors. (Filed herewith)
11. -- Not applicable.
12. -- Not applicable.
13. -- Calculation of Performance Information. (Filed herewith)
14. -- Not applicable.
15. -- Company Organizational Chart.**
</TABLE>
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<PAGE> 120
---------------
* Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Form N-4 Registration Statement as electronically filed on
May 26, 1998 (File No. 33-86464).
** Incorporated by reference to Post-Effective Amendment No. 6 to
Registrant's Form N-4 Registration Statement as electronically filed on
September 29, 1998 (File No. 33-86464).
*** Incorporated by reference to Post-Effective Amendment No. 6 to
Registrant's Form N-4 Registration Statement as electronically filed on
March 2, 1998 (File No. 33-86464).
**** Incorporated by reference to Post-Effective Amendment No. 7 to
Registrant's Form N-4 Registration Statement as electronically filed on
April 29, 1999 (33-86464).
***** Incorporated by reference to Pre-Effective Amendment No. 2 to
Registrant's Form N-4 Registration Statement as electronically filed on
July 16, 1999 (333-70801).
****** Incorporated by reference to Post-Effective Amendment No. 8 to
Registrant's Form N-4 Registration Statement as electronically filed on
December 22, 1999 (33-86464).
******* Incorporated by reference to Post-Effective Amendment No. 1 to
Registrant's Form N-4 Registration Statement as electronically filed on
April 18, 2000 (333-70801).
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors and principal officers of the Company are set forth below,
together with their current principal occupations including any position with
American General Corporation ("AGC"), the indirect parent of American General
Annuity Insurance Company ("AGAIC"), the depositor of the Registrant. The
business address of each officer and director is 2929 Allen Parkway, Houston,
Texas 77019.
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES HELD WITH DEPOSITOR
------------------- -----------------------------------------
<S> <C>
John A. Graf................................... Chairman, President and Chief Executive
Officer - AGAIC; Vice Chairman and Group
Executive - Retirement Services - AGC
Bruce R. Abrams................................ Director and Executive Vice
President - AGAIC
Kent E. Barrett................................ Director, Executive Vice President and
Chief Financial Officer - AGAIC
Rebecca G. Campbell............................ Director and Senior Vice President -
Human Resources - AGAIC
Robert P. Condon............................... Director and Executive Vice President -
Institutional Marketing - AGAIC
Robert M. Devlin............................... Director - AGAIC; Chairman, President
and Chief Executive Officer - AGC
Carl J. Santillo............................... Director and Executive Vice President
- Operations - AGAIC
Mary Cavanaugh................................. Executive Vice President - General
Counsel and Secretary - AGAIC
Kathleen Adamson............................... Senior Vice President - Customer
Service - AGAIC
Michael J. Akers............................... Senior Vice President and Chief
Actuary - AGAIC
Dick Baily..................................... Senior Vice President - Planning
and Expense Management - AGAIC
Michael A. Betts............................... Senior Vice President - Systems
- AGAIC
Stephen G. Kellison............................ Senior Vice President - Product
Management - AGAIC
Richard J. Lindsay............................. Senior Vice President - Marketing - AGAIC
Robert E. Steele............................... Senior Vice President -- Specialty
Products -- AGAIC
Rosemary Beauvais.............................. Vice President - Corporate Technology
Services - AGAIC
James D. Bonsall............................... Vice President - Financial Reporting
- AGAIC
Neil J. Davidson............................... Vice President - Actuarial - AGAIC
David H. denBoer............................... Vice President - Compliance - AGAIC
Sharla A. Jackson.............................. Vice President - Customer Service -
Amarillo - AGAIC
Larry Robinson................................. Vice President - Product Development
- AGAIC
Richard W. Scott............................... Vice President and Chief Investment
Officer - AGAIC; Vice Chairman and Group
Executive - Investment Management - AGC
Gregory R. Seward.............................. Vice President - Variable Product
Accounting - AGAIC
Paula F. Snyder................................ Vice President - AGRS Marketing
Communications - AGAIC
</TABLE>
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<PAGE> 121
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES HELD WITH DEPOSITOR
------------------- -----------------------------------------
<S> <C>
Peter V. Tuters................................. Vice President and Investment Officer -
AGAIC Senior Vice President -
Investments - AGC
William A. Wilson............................... Vice President - Government Affairs -
AGAIC
D. Lynne Walters................................ Tax Officer - AGAIC Senior Vice
President - Taxes - AGC
Cheryl G. Hemley................................ Assistant Secretary - AGAIC
Susan Miller.................................... Assistant Secretary - AGAIC Assistant
Secretary -- AGC
Connie E. Pritchett............................. Assistant Secretary - AGAIC
Daniel R. Cricks................................ Assistant Tax Officer - AGAIC
William H. Murray............................... Assistant Treasurer - AGAIC
Tara S. Rock.................................... Assistant Treasurer - AGAIC
Marylyn S. Zlotnick............................. Assistant Controller - AGAIC
Donald L. Davis................................. Administrative Officer - AGAIC
William R. Keller, Jr........................... Administrative Officer - AGAIC
</TABLE>
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<PAGE> 122
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
SUBSIDIARIES OF AMERICAN GENERAL CORPORATION (1),(2),(3),(4),(5)
The following is a list of American General Corporation's subsidiaries as of May
30, 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
American General 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 Institution Group, Inc...................... Delaware
WNL Insurance Services, Inc............................................ Delaware
American General Asset Management Corp. ........................................ Delaware
American General International, Inc. ........................................... Delaware
American General Enterprise Services, Inc. ..................................... Delaware
</TABLE>
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<PAGE> 123
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
--------------------------------------------------------------------------------- ---------------
<S> <C>
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
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 Funds Distributors, Inc. ...................................... Delaware
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
</TABLE>
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<PAGE> 124
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
--------------------------------------------------------------------------------- ---------------
<S> <C>
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.
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
C-6
<PAGE> 125
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)
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.
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<PAGE> 126
(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.
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<PAGE> 127
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
AGAMC American General Asset Management Corp. ................................ DE
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 .............................................
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
AGFDI American General Funds Distributors, 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
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
</TABLE>
C-9
<PAGE> 128
<TABLE>
<S> <C> <C>
AGRA American General Realty Advisors, Inc. ................................. DE
AGRI American General Realty Investment Corporation ......................... TX
AGRSC American General Retirement Services Company............................ 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
URSC USLIFE Real Estate Service 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
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-10
<PAGE> 129
ITEM 27. NUMBER OF CONTRACT OWNERS
This is a new Contract, therefore there are no Owners of the Contracts.
ITEM 28. INDEMNIFICATION
The Bylaws (Article VI - Section 1) of the Company provide that:
The Corporation shall indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that he is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
(collectively, "Agent") against expenses (including attorneys, fees),
judgments, fines, penalties, court costs and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order, settlement (whether with or without
court approval), conviction or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the Agent did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful. If several claims, issues or matters are
involved, an Agent may be entitled to indemnification as to some matters
even though he is not entitled as to other matters. Any director or officer
of the Corporation serving in any capacity of another corporation, of which
a majority of the shares entitled to vote in the election of its directors
is held, directly or indirectly, by the Corporation, shall be deemed to be
doing so at the request of the Corporation.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted directors and officers or controlling persons
of the Company pursuant to the foregoing, or otherwise, the Company 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,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company 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 Company 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.
C-11
<PAGE> 130
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) American General Distributors, Inc. ("Distributor") is the principal
underwriter for the Contracts. The following persons are the officers and
directors of Distributor.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER
------------------ --------------------
<S> <C>
Robert P. Condon..................................Chairman, Director, Chief
Executive Officer and President
Mary Cavanaugh....................................Director and Secretary
Thomas G. Norwood.................................Director, Chief Financial
Officer and Treasurer
Jane E. Bates.....................................Vice President and Chief
Compliance Officer
V. Keith Roberts..................................Vice President - Operations
D. Lynne Walters ................................Tax Officer
Cheryl G. Hemley..................................Assistant Secretary
Daniel R. Cricks..................................Assistant Tax Officer
James D. Bonsall..................................Assistant Treasurer
Steven D. Rubinstein..............................Assistant Treasurer
Marylyn S. Zlotnick...............................Assistant Treasurer
</TABLE>
The principal business address is 2929 Allen Parkway, Houston, Texas 77019.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All records referenced under Section 31(a) of the Investment Company Act of
1940 and the rules promulgated thereunder are maintained and are in the custody
of American General Annuity Insurance Company at its principal executive office
located at 2929 Allen Parkway, Houston, TX 77019.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payments under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under this
Form promptly upon written or oral request.
d. American General Annuity Insurance Company ("Company"), hereby
represents that the fees and charges deducted under the Contract described in
the Prospectus, in the aggregate, are reasonable in relation to the services
rendered, the expenses to be incurred and the risks assumed by the Company.
C-12
<PAGE> 131
Representations
(1) The Company hereby represents that it is relying upon Investment
Company Act Rule 6c-7. The Company further represents that paragraphs (a)-(d) of
Rule 6c-7 have been complied with.
(2) The Company hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
C-13
<PAGE> 132
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Kent E.
Barrett, Mary L. Cavanaugh 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, A.G. Separate Account A, certifies that it has duly
caused this Registration Statement to be signed on its behalf, in the City of
Houston, and State of Texas on this 28th day of June, 2000.
A.G. SEPARATE ACCOUNT A
(Registrant)
BY: AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
(On behalf of the Registrant and itself)
BY: /s/ John A. Graf
-----------------------------------------
John A. Graf
Chairman, Chief Executive Officer
and President
[SEAL]
Attest: /s/ Mary L. Cavanaugh
----------------------------------
Mary L. Cavanaugh
Senior Vice President, General Counsel
and Secretary
<PAGE> 133
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 Annuity Insurance Company in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John A. Graf
-----------------------------
John A. Graf Chairman, Chief Executive June 28, 2000
Officer and President
/s/ Kent E. Barrett Director, Executive Vice President, June 28, 2000
----------------------------- Chief Financial Officer and
Kent E. Barrett Principal Accounting Officer
/s/ Bruce R. Adams Director June 28, 2000
-----------------------------
Bruce R. Abrams
Director June , 2000
----------------------------- --
Carl J. Santillo
Director June , 2000
----------------------------- --
Robert M. Devlin
/s/ Robert P. Condon Director June 28, 2000
-----------------------------
Robert P. Condon
/s/ Rebecca G. Campbell Director June 28, 2000
-----------------------------
Rebecca G. Campbell
</TABLE>
<PAGE> 134
INDEX TO EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. 2
TO FORM N-4 REGISTRATION STATEMENT
FOR
A.G. SEPARATE ACCOUNT A
OF
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4 Form of Individual Fixed and Variable Deferred Annuity
Contract
5 Form of Individual Fixed and Variable Deferred Annuity
Contract Application Form
8(i)(C) Form of Amendment No. 2 to Participation Agreement
between AIM Variable Insurance Funds, A I M
Distributors, Inc., American General Distributors, Inc. and
American General Annuity Insurance Company
8(iii)(C) Form of First Amendment to Participation Agreement
between Franklin Templeton Variable Insurance Products
Trust, Franklin Templeton Distributors, Inc. and American
General Annuity Insurance Company
8(iii)(D) Form of First Amendment to Administrative Services
Agreement between American General Annuity Insurance
Company and Franklin Templeton Services, Inc.
8(iv)(B) Form of Third Amendment to Participation Agreement
among Oppenheimer Variable Account Funds,
OppenheimerFunds, Inc. and American General Annuity
Insurance Company
10 Consent of Independent Auditors
13 Calculation of Performance Information
</TABLE>
