<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 2000
REGISTRATION NOS. 333-70801/811-8862
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. [ ]
Post-Effective Amendment No. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 16 [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)
---------------------
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485.
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485.
[ ] on (date) pursuant to paragraph (a) (1) of Rule 485.
TITLE OF SECURITIES BEING REGISTERED: Individual
Variable Annuity Contracts
SEQUENTIAL NUMBER SYSTEM: PAGE OF PAGES
EXHIBIT INDEX ON SEQUENTIAL PAGE NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE ONE(R) MULTI-MANAGER ANNUITY(SM)
PROSPECTUS
May 1, 2000
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
A.G. SEPARATE ACCOUNT A
<PAGE> 3
(This page intentionally left blank)
<PAGE> 4
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
UNITS OF INTEREST UNDER FLEXIBLE PREMIUM INDIVIDUAL FIXED AND
VARIABLE DEFERRED ANNUITY CONTRACTS
THE ONE(R) MULTI-MANAGER ANNUITY(SM)
A.G. SEPARATE ACCOUNT A
May 1, 2000
PROSPECTUS
Under the Flexible Premium Individual Fixed and Variable Deferred Annuity
Contracts (the "Contracts") described in this prospectus, you may accumulate
Contract 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 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 17 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 May 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 1-877-888-9859.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY
BANK ONE CORPORATION OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, AND ARE NOT
FEDERALLY INSURED OR GUARANTEED 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> 5
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....................... 6
Transfers...................................... 6
Fees and Charges............................... 6
Payout Options................................. 6
Federal Tax Information........................ 6
Purchase Requirements.......................... 6
SELECTED PURCHASE UNIT DATA........................ 8
GENERAL INFORMATION................................ 10
About the Contract............................. 10
About the Company.............................. 10
About A.G. Separate Account A.................. 10
Units of Interest.............................. 11
Distribution of the Contracts.................. 11
VARIABLE ACCOUNT OPTIONS........................... 12
PURCHASE PERIOD.................................... 13
Purchase Payments.............................. 13
Right to Return................................ 13
Purchase Units................................. 13
Calculation of Purchase Unit Value............. 13
Choosing Investment Options.................... 14
Fixed Account Options..................... 14
Variable Account Options.................. 14
Stopping Purchase Payments..................... 14
TRANSFERS BETWEEN INVESTMENT OPTIONS............... 15
During the Purchase Period..................... 15
During the Payout Period....................... 15
Communicating Transfer or Reallocation
Instructions................................. 15
Effective Date of Transfer..................... 16
Reservation of Rights and Market Timing........ 16
Dollar Cost Averaging Program.................. 16
FEES AND CHARGES................................... 17
Surrender Charge............................... 17
Amount of Surrender Charge................ 17
10% Free Withdrawal....................... 17
Exceptions to Surrender Charge............ 17
Premium Tax Charge............................. 17
Separate Account Charges....................... 17
Fund Annual Expense Charges.................... 18
Other Tax Charges.............................. 18
PAYOUT PERIOD...................................... 19
Fixed Payout................................... 19
Variable Payout................................ 19
Combination Fixed and Variable Payout.......... 19
Payout Date.................................... 19
Payout Options................................. 19
Payout Information............................. 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SURRENDER OF ACCOUNT VALUE......................... 21
When Surrenders are Allowed.................... 21
Amount That May Be Surrendered................. 21
Partial Surrender.............................. 21
Systematic Withdrawal Program.................. 21
Distributions Required by Federal Tax Law...... 21
DEATH BENEFITS..................................... 22
Beneficiary Information........................ 22
Special Information for Non-Tax Qualified
Contracts.................................... 22
Joint Owner Spousal Election Information....... 22
During the Purchase Period..................... 22
During the Payout Period....................... 22
HOW TO REVIEW INVESTMENT PERFORMANCE OF SEPARATE
ACCOUNT DIVISIONS................................ 23
Types of Investment Performance Information
Advertised................................... 23
Total Return Performance Information......... 23
Standard Average Annual Total Return......... 23
Nonstandard Average Annual Total Return...... 23
Cumulative Total Return...................... 23
Annual Change in Purchase Unit Value......... 24
Cumulative Change in Purchase Unit Value..... 24
Total Return Based on Different Investment
Amounts................................... 24
An Assumed Account Value of $15,000.......... 24
Yield Performance Information.................. 24
AGSPC MONEY MARKET DIVISION........................ 24
DIVISIONS OTHER THAN THE AGSPC MONEY MARKET
DIVISION......................................... 24
PERFORMANCE INFORMATION............................ 24
Average Annual Total Return and Cumulative
Return Tables................................ 24
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.......................................... 33
</TABLE>
<PAGE> 6
ABOUT THE PROSPECTUS
- --------------------------------------------------------------------------------
Unless otherwise specified in this prospectus, the words we, our, Company, AGAIC
and American General Annuity 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.................. 15
A.G. Separate Account A........ 30
Annuitant...................... 19,22
Annuity Service Center......... 15
Assumed Investment Rate........ 19
Beneficiary.................... 22
Contract Anniversary........... 6,15,22
Contract Owner................. 30
Contract Year.................. 17
Divisions...................... 23
Fixed Account Options.......... 22
Mutual Fund or Fund............ 10
Payout Period.................. 15
Payout Unit.................... 19
Purchase Payments.............. 13,23
Purchase Period................ 15
Purchase Unit.................. 13
Variable Account Options....... 12,22
</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> 7
FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT OWNER EXPENSES(1)(2)
<TABLE>
<S> <C>
Maximum Surrender Charge.................................. 7.00%
</TABLE>
(as a percentage of the Purchase Payment withdrawn and based on the length of
time from when each Purchase Payment was received)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of Average Account Value):
<TABLE>
<S> <C>
Mortality and Expense Risk Fee............................ 1.00%
Administration Fee........................................ .15%
-----
Total Separate Account Fee......................... 1.15%
</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 $25 for each
transfer. See the "Transfers Between Investment Options" section of this
prospectus.
FUND ANNUAL EXPENSES
(as a percentage of net assets):
<TABLE>
<CAPTION>
TOTAL
ANNUAL
PORTFOLIO
EXPENSES
MANAGEMENT (AFTER
FEES (AFTER 12B-1 OTHER FEE
FUND FEE WAIVER) FEES EXPENSES(1) WAIVER)
---- ----------- ------ ----------- ---------
<S> <C> <C> <C> <C>
AGSPC Money Market Fund(3) 0.50% -- 0.07% 0.57%
AIM V.I. International Equity Fund(3) 0.75 -- 0.22 0.97
AIM V.I. Value Fund(3) 0.61 -- 0.15 0.76
Franklin Small Cap Fund -- Class 2(3)(4)(5) 0.55 0.25% 0.27 1.07
One Group(R) Investment Trust Balanced Portfolio 0.70 -- 0.25 0.95
One Group(R) Investment Trust Bond Portfolio(2)(6) 0.53 -- 0.22 0.75
One Group(R) Investment Trust Diversified Equity
Portfolio(2)(6) 0.72 -- 0.23 0.95
One Group(R) Investment Trust Diversified Mid Cap
Portfolio(2)(6) 0.68 -- 0.27 0.95
One Group(R) Investment Trust Equity Index Portfolio(2) 0.27 -- 0.28 0.55
One Group(R) Investment Trust Government Bond Portfolio 0.45 -- 0.28 0.73
One Group(R) Investment Trust Large Cap Growth Portfolio 0.65 -- 0.23 0.88
One Group(R) Investment Trust Mid Cap Growth Portfolio 0.65 -- 0.27 0.92
One Group(R) Investment Trust Mid Cap Value Portfolio(2)(6) 0.67 -- 0.28 0.95
Oppenheimer High Income Fund/VA(3) 0.74 -- 0.01 0.75
Templeton Development Markets Securities Fund -- Class
2(3)(5)(7) 1.25 0.25 0.31 1.81
Van Kampen LIT Emerging Growth Portfolio(2)(3) 0.67 -- 0.18 0.85
Van Kampen LIT Enterprise Portfolio(2)(3) 0.47 -- 0.13 0.60
</TABLE>
- ------------
(1) OTHER EXPENSES may include custody, accounting, reports to shareholders,
audit, legal, administrative or other miscellaneous expenses. See each
Fund's prospectus and statement of additional information which may contain
more detailed information on these fees.
(2) In the absence of management fee waivers, management fees, other expenses
and total annual portfolio operating expenses, respectively, would be: One
Group Investment Trust Bond Portfolio, 0.60%, 0.22% and 0.82%; One Group
Investment Trust Diversified Equity Portfolio, 0.74%, 0.23% and 0.97%; One
Group Investment Trust Diversified Mid Cap Portfolio, 0.74%, 0.27% and
1.01%; One Group Investment Trust Equity Index Portfolio, 0.30%, 0.28% and
0.58%; One Group Investment Trust Mid Cap Value Portfolio, 0.74%, 0.28% and
1.02%; Van Kampen LIT Emerging Growth Portfolio, 0.70%, 0.18% and 0.88%;
and Van Kampen LIT Enterprise Portfolio, 0.50%, 0.12% and 0.62%.
(3) 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.
(4) On February 8, 2000, shareholders of the Franklin Small Cap Investments
Fund (previously offered under the Contract) approved a merger and
reorganization that merged the Franklin Small Cap Investments Fund into the
Franklin Small Cap Fund, effective May 1, 2000. The table shows restated
total expenses for the Franklin Small Cap Fund based on the new fund fees
(approved on February 8, 2000 by the Franklin Small Cap Fund shareholders)
and the assets of the Franklin Small Cap 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 0.55%, 12b-1 Fees 0.25%,
Other Expenses 0.27%, and Total Annual Portfolio Expenses 1.07%.
(5) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus.
(6) Figures reflect expenses which have been restated to reflect estimates of
current fees for the current fiscal year.
(7) On February 8, 2000, shareholders of the Templeton Developing Markets Fund
(previously offered under the Contract) 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%.
2
<PAGE> 8
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(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 Money Market Fund Division 26 $17 $54 N/A N/A
AIM V.I. International Equity Fund Division 21 22 66 N/A N/A
AIM V.I. Value Fund Division 20 19 60 N/A N/A
Franklin Small Cap Fund -- Class 2 Division 23 17 53 N/A N/A
One Group Investment Trust Balanced Portfolio Division 9 21 66 N/A N/A
One Group Investment Trust Bond Portfolio Division 8 19 60 N/A N/A
One Group Investment Trust Diversified Equity Portfolio
Division 1 21 66 N/A N/A
One Group Investment Trust Diversified Mid Cap Portfolio
Division 6 21 65 N/A N/A
One Group Investment Trust Equity Index Portfolio Division 2 17 54 N/A N/A
One Group Investment Trust Government Bond Portfolio
Division 7 19 59 N/A N/A
One Group Investment Trust Large Cap Growth Portfolio
Division 3 21 64 N/A N/A
One Group Investment Trust Mid Cap Growth Portfolio Division
5 21 65 N/A N/A
One Group Investment Trust Mid Cap Value Portfolio Division
4 21 66 N/A N/A
Oppenheimer High Income Fund/VA Division 25 19 60 N/A N/A
Templeton Developing Markets Securities Fund -- Class 2
Division 24 30 92 N/A N/A
Van Kampen LIT Emerging Growth Portfolio Division 22 20 63 N/A N/A
Van Kampen LIT Enterprise Portfolio Division 27 18 55 N/A N/A
</TABLE>
EXAMPLE #2 -- If you surrender the Contract at the end of the period shown:
- --------------------------------------------------------------------------------
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 Money Market Fund Division 26 $83 $104 N/A N/A
AIM V.I. International Equity Fund Division 21 86 115 N/A N/A
AIM V.I. Value Fund Division 20 84 109 N/A N/A
Franklin Small Cap Fund -- Class 2 Division 23 82 102 N/A N/A
One Group Investment Trust Balanced Portfolio Division 9 86 115 N/A N/A
One Group Investment Trust Bond Portfolio Division 8 84 109 N/A N/A
One Group Investment Trust Diversified Equity Portfolio
Division 1 86 115 N/A N/A
One Group Investment Trust Diversified Mid Cap Portfolio
Division 6 86 114 N/A N/A
One Group Investment Trust Equity Index Portfolio Division 2 82 103 N/A N/A
One Group Investment Trust Government Bond Portfolio
Division 7 84 109 N/A N/A
One Group Investment Trust Large Cap Growth Portfolio
Division 3 85 113 N/A N/A
One Group Investment Trust Mid Cap Growth Portfolio Division
5 86 114 N/A N/A
One Group Investment Trust Mid Cap Value Portfolio Division
4 86 115 N/A N/A
Oppenheimer High Income Fund/VA Division 25 84 109 N/A N/A
Templeton Developing Markets Securities Fund -- Class 2
Division 24 94 139 N/A N/A
Van Kampen LIT Emerging Growth Portfolio Division 22 85 112 N/A N/A
Van Kampen LIT Enterprise Portfolio Division 27 83 105 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 and statements of additional information. 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 requires that Examples for only the one and
three year period be completed.
3
<PAGE> 9
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 the entire prospectus carefully.
FIXED AND VARIABLE OPTIONS
The Contract offers a choice from among 17 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 -- --
OPTIONS Guarantee income
Period ("One
Year Fixed
Account")
----------------------------------------------------------------------------------------------
DCA One Year Guaranteed current interest -- --
Guarantee income
Period ("DCA
One Year Fixed
Account")
----------------------------------------------------------------------------------------------
DCA Six Month Guaranteed current interest -- --
Guarantee income
Period ("DCA
Six Month
Fixed
Account")
- --------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OBJECTIVE ADVISER SUB-ADVISER
ACCOUNT
OPTIONS
- --------------------------------------------------------------------------------------------------------
EQUITY AIM V.I. Long-term growth of capital by A I M Advisors, Inc. --
FUNDS International investing in a diversified
Equity Fund** portfolio of international
equity securities.
----------------------------------------------------------------------------------------------
AIM V.I. Value Long-term growth of capital by A I M Advisors, Inc. --
Fund** investing primarily in equity
securities. Income is a
secondary objective.
----------------------------------------------------------------------------------------------
Franklin Small Seeks long-term capital Franklin Advisers, --
Cap growth. The Fund invests Inc.
Fund -- Class primarily in equity securities
2***** of smaller capitalization
growth companies.
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks to provide Banc One Investment --
Investment total return while preserving Advisors Corporation
Trust Balanced capital.
Portfolio****
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks long term Banc One Investment --
Investment capital growth and growth of Advisors Corporation
Trust income with a secondary
Diversified objective of providing a
Equity moderate level of current
Portfolio**** income.
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks long term Banc One Investment --
Investment capital growth by investing Advisors Corporation
Trust primarily in equity securities
Diversified of companies with intermediate
Mid Cap capitalizations.
Portfolio****
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks investment Banc One Investment --
Investment results that correspond to the Advisors Corporation
Trust Equity aggregate price and dividend
Index performance of securities in
Portfolio**** the Standard & Poor's 500
Composite Stock Price Index
("S&P 500").(1)
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks growth of Banc One Investment --
Investment capital and secondarily, Advisors Corporation
Trust Mid Cap current income by investing
Growth primarily in equity
Portfolio**** securities.
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks long-term Banc One Investment --
Investment capital appreciation and Advisors Corporation
Trust Large growth of income by investing
Cap Growth primarily in equity
Portfolio**** securities.
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks capital Banc One Investment --
Investment appreciation with the Advisors Corporation
Trust Mid Cap secondary goal of achieving
Value current income by investing
Portfolio**** primarily in equity
securities.
----------------------------------------------------------------------------------------------
Templeton Seeks long-term capital Templeton Asset --
Developing appreciation. The Fund invests Management, Ltd.
Markets primarily in emerging market
Securities equity securities.
Fund -- Class
2*****
----------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
VARIABLE INVESTMENT OBJECTIVE ADVISER SUB-ADVISER
ACCOUNT
OPTIONS
- --------------------------------------------------------------------------------------------------------
Van Kampen LIT Capital appreciation by Van Kampen Asset --
Emerging investing in common stocks of Management Inc.
Growth emerging growth companies.
Portfolio******
----------------------------------------------------------------------------------------------
Van Kampen LIT Capital appreciation through Van Kampen Asset --
Enterprise investments in securities Management Inc.
Portfolio****** believed to have above average
potential for capital
appreciation.
- --------------------------------------------------------------------------------------------------------
INCOME One Group The Portfolio seeks to Banc One Investment --
FUNDS Investment maximize total return by Advisors Corporation
Trust Bond investing primarily in a
Portfolio**** diversified portfolio of
intermediate and long
term-debt securities.
----------------------------------------------------------------------------------------------
One Group The Portfolio seeks a high Banc One Investment --
Investment level of current income with Advisors Corporation
Trust liquidity and safety of
Government principal.
Bond
Portfolio****
----------------------------------------------------------------------------------------------
Oppenheimer Seeks to provide a high level OppenheimerFunds, --
High Income of current income from Inc.
Fund/VA*** investment in high yield
fixed-income securities.
- --------------------------------------------------------------------------------------------------------
MONEY AGSPC Money Seeks liquidity, protection of VALIC --
MARKET Market Fund* capital and current income
FUND through investments in
short-term money market
instruments.
- --------------------------------------------------------------------------------------------------------
* 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 One Group Investment Trust.
***** A series of Franklin Templeton Variable Insurance Products Trust.
****** A series of Van Kampen Life Investment Trust.
1. S&P 500 is a registered service mark of Standard & Poor's Corporation, which does not sponsor and
is in no way affiliated with One Group Investment Trust.
</TABLE>
5
<PAGE> 11
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);
- - 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; or
- - The greatest Account Value on any prior Seventh Contract Anniversary plus net
Purchase Payments made after such Contract Anniversary, less any partial
surrenders.
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 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
1-877-888-9859. For more information on account transfers, see the "Transfers
Between Investment Options" section in this prospectus.
FEES AND CHARGES
SURRENDER CHARGE
Under some circumstances a surrender charge is made to your account. These
situations are discussed in detail in the section of this 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 3.5% 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
1.00% and 0.15%, respectively, on the average daily net asset value of A.G.
Separate Account A.
FUND ANNUAL EXPENSE CHARGES
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 fees and 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 to fund individual retirement accounts
("IRAs") which may receive favorable tax treatment under federal law.
PURCHASE REQUIREMENTS
The minimum initial Purchase Payment for Non-Qualified Contracts and for
Qualified Contracts is $15,000. The minimum subsequent Purchase Payment is
$1,000 for Non-Qualified Contracts and $250 for Qualified Contracts. The minimum
Purchase Payment requirements may be waived with prior approval by the Company.
The minimum amount per a preauthorized debit Purchase Payment under the
Automatic Check Option is $100. More information about the Automatic Check
Option can be found in the "Purchase Period" section of this prospectus.
More information on FEES
may be found in the
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 the prospectus and
of the Statement of Additional
Information.
CONTRACT ANNIVERSARY --the
date that the contract
is issued and each
yearly anniversary
of that date thereafter.
6
<PAGE> 12
(This page intentionally left blank)
7
<PAGE> 13
SELECTED PURCHASE UNIT DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ONE GROUP ONE GROUP
AGSPC AIM V.I. INVESTMENT INVESTMENT
MONEY INTERNATIONAL AIM V.I. FRANKLIN TRUST TRUST
MARKET EQUITY VALUE SMALL CAP BALANCED BOND
FUND FUND FUND FUND-CLASS 2 PORTFOLIO PORTFOLIO
DIVISION 26 DIVISION 21 DIVISION 20 DIVISION 23(1) DIVISION 9 DIVISION 8
----------- ------------- ----------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1999
Purchase Units in Force 42,400 51,103 177,390 14,169 60,756 103,549
Purchase Unit Values $10.162799 $14.555490 $11.585991 $14.848464 $10.405275 $9.975510
August 2, 1999
Purchase Unit Values(2) $10.000000 $10.000000 $10.000000 $10.000000 $10.000000 $10.000000
<CAPTION>
ONE GROUP ONE GROUP ONE GROUP
INVESTMENT INVESTMENT INVESTMENT
TRUST TRUST TRUST
DIVERSIFIED DIVERSIFIED EQUITY
EQUITY MID CAP INDEX
PORTFOLIO PORTFOLIO PORTFOLIO
DIVISION 1 DIVISION 6 DIVISION 2
----------- ----------- ----------
<S> <C> <C> <C>
December 31, 1999
Purchase Units in Force 86,671 18,758 65,764
Purchase Unit Values $10.486688 $10.635848 $11.044862
August 2, 1999
Purchase Unit Values(2) $10.000000 $10.000000 $10.000000
</TABLE>
- ------------
(1) Effective May 1, 2000 the Franklin Small Cap Investments Fund (previously
offered under the Contract) merged into the Franklin Small Cap Fund.
Accordingly, the Franklin Small Cap Investments Fund Division 23 was renamed
the Franklin Small Cap Fund Division 23. The Selected Purchase Unit Data for
the Division through December 31, 1999, reflects units of the Franklin Small
Cap Investments Fund Division 23.
(2) Purchase Unit Value at Date of Inception.
8
<PAGE> 14
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ONE GROUP ONE GROUP ONE GROUP ONE GROUP
INVESTMENT INVESTMENT INVESTMENT INVESTMENT TEMPLETON
TRUST TRUST TRUST TRUST OPPENHEIMER DEVELOPING VAN KAMPEN
GOVERNMENT LARGE CAP MID CAP MID CAP HIGH MARKETS LIT EMERGING VAN KAMPEN
BOND GROWTH GROWTH VALUE INCOME SECURITIES GROWTH LIT ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND/VA FUND-CLASS 2 PORTFOLIO PORTFOLIO
DIVISION 7 DIVISION 3 DIVISION 5 DIVISION 4 DIVISION 25 DIVISION 24(3) DIVISION 22 DIVISION 27
- ---------- ---------- ---------- ---------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
101,010 165,758 64,305 90,704 44,465 6,719 58,595 15,987
$10.026807 $11.882560 $12.322856 $9.825063 $ 9.961553 $11.653718 $16.921777 $12.091912
$10.000000 $10.000000 $10.000000 $10.000000 $10.000000 $10.000000 $10.000000 $10.000000
</TABLE>
- ------------
(3) 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 Templeton Developing
Markets Fund Division 24 was renamed the Templeton Developing Markets
Securities Fund Division 24. The Selected Purchase Unit Data for the
Division through December 31, 1999, reflects units of the Templeton
Developing Markets Fund Division 24.
Financial statements of A.G. Separate Account A are included in the Statement of
Additional Information, which is available upon request. Purchase units shown
are for a Purchase Unit outstanding throughout the year under a representative
contract of the type invested in each column shown. The unit value of each
Division of A.G. Separate Account A will not be the same on any given day as the
net asset value per share of the underlying Mutual Fund portfolios described in
this prospectus in which that Division invests. This is because each unit value
consists of the underlying share's net asset value minus the charges to A.G.
Separate Account A. In addition, dividends declared by the underlying Fund are
reinvested by the Division in additional shares. These distributions have the
effect of reducing the value of each share of the Fund and increasing the number
of Fund shares outstanding. However, the total cash value in A.G. Separate
Account A does not change as a result of such distributions.
9
<PAGE> 15
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
for the Contracts is located at 2727-A Allen Parkway, Houston, Texas 77019. 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." 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 Five represents and invests in the One Group Investment Trust
Mid Cap Growth Portfolio. 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. Prior to May 1, 1998, AGA Separate Account A was known as
WNL 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
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.
10
<PAGE> 16
- --------------------------------------------------------------------------------
the Contract, A.G. Separate Account A may not be charged with the liabilities
of any other 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 INTEREST
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 interest 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 7% 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.
11
<PAGE> 17
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 1 fund for which
The Variable Annuity Life Insurance Company ("VALIC") serves as investment
adviser.
- - One Group Investment Trust -- offers 9 funds, for which Banc One Investment
Advisors Corporation serves as investment adviser.
- - Oppenheimer Variable Account Funds -- offers 1 fund for which
OppenheimerFunds, Inc. serves as investment adviser.
- - Franklin Templeton Variable Insurance Products Trust -- offers 2 funds for
which Franklin Advisers, Inc. and Templeton Asset Management Ltd. serve as
investment advisers.
- - Van Kampen Life Investment Trust -- offers 2 funds for which Van Kampen Asset
Management Inc. serves as investment adviser.
Each of these Funds is registered as a diversified open-end, management
investment company and is regulated under the 1940 Act. For more information
about each of these Funds, including charges and expenses, you should refer to
the prospectus and statement of additional information 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 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.
12
<PAGE> 18
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 is received.
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(1) $15,000 $1,000
Qualified Contract(1) $15,000 $ 250
</TABLE>
- ---------------
(1) These amounts may be lowered with prior Company approval.
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 the Automatic Check Option. The Automatic Check Option allows you
to preauthorize debits against a bank account that you indicate. The minimum
amount per a preauthorized debit Purchase Payment under the Automatic Check
Option is $100.
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 certain 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 certain 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 after you
receive it (may vary by state). 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 our Annuity
Service Center 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.
13
<PAGE> 19
- --------------------------------------------------------------------------------
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 20 investment options offered under the Contract. This includes 3
Fixed Account Options and 17 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 is 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 the Fixed Account Options at declared
rates, which may be different for each option. We bear the entire investment
risk for the Fixed Account Option. All Purchase Payments and interest earned on
such amounts in your Fixed Account Option 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 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 and in each Fund's 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.
14
<PAGE> 20
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 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 $25 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 a maximum of 25% of the Account Value of the One Year Fixed
Account Option, per year.
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 or by transferring the entire
Account Value in the respective DCA Fixed Account Option. 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 $25 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 Guarantee Option if less. The
Period Fixed Account minimum amount which
Option. 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 a fee of $25.
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
1-877-888-9859. 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.
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
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 for the
Contracts is located at
2727-A Allen Parkway,
Houston, Texas 77019
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.
15
<PAGE> 21
- --------------------------------------------------------------------------------
responsibility. This includes losses from errors in communication. Telephone
transfer instructions may not be made during the Payout Period. We reserve the
right to stop telephone transfers at any time.
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. The One Year Fixed
Account Option may also be used for dollar cost averaging over a maximum of 60
months with a maximum of 25% of Account Value allowed to be transferred per
year.
We determine the amount of transfers from a Fixed Account Option or the Money
Market Division by dividing the Purchase Payments allocated to that Fixed
Account Option or the Money Market Division by a factor based on the number of
months remaining in the term. Transfers from a 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.
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. Any transfers of Account Value from a DCA Fixed
Account Option, which are not made under the Dollar Cost Averaging Program, must
be for 100% of the Account Value in the DCA Fixed Account Option from which the
transfer is made. We currently do not permit transfers to either DCA Fixed
Account Option from the Variable Account Options or the One Year Fixed Account
Option.
You may enroll in the Dollar Cost Averaging Program for the DCA Fixed Account
Options only when you make your initial or additional Purchase Payments.
However, you may enroll in the Dollar Cost Averaging Program for the Money
Market Division and the One Year Fixed Account Option at any time. If you choose
the Money Market Division for dollar cost averaging, it must be for at least a
12 month period. There is no charge for the Dollar Cost Averaging Program. 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)
- - One Year Fixed Monthly You may only use
Account Option this account
option for the
Dollar Cost
Averaging Program
for a maximum of
60 months and you
may only transfer
up to 25% of your
Account Value per
a year.
- - 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.
16
<PAGE> 22
FEES AND CHARGES
- --------------------------------------------------------------------------------
By investing in the Contract, you may be subject to five basic types of fees and
charges:
- - 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.
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 may be withdrawn each Contract Year without a surrender charge. During the
First Contract Year, up to 10% of the Account Value may be withdrawn without a
surrender charge only under the systematic withdrawal option, see the "Surrender
of Account Value" section of this prospectus. 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 date of the first withdrawal during the Contract Year, just prior to
the withdrawal.
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 made after the fourth Contract Year; 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.
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 1.00%
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 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
CONTRACT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract.
17
<PAGE> 23
- --------------------------------------------------------------------------------
limited to enrollment and Contract Owner education).
The Company may make a profit on the mortality and expense risk fee and on the
administration fee.
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 described in the prospectuses
and statements of additional information for the Funds and in this prospectus.
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.
18
<PAGE> 24
PAYOUT PERIOD
- --------------------------------------------------------------------------------
The Payout Period (Annuity 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(2);
- 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 may choose:
- From your existing Variable Account Options (payments will vary); with a
- 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. Unless you select a Payout Date, we will automatically
extend the Payout Date to begin at the later of when you attain age 90 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. Non-qualified annuities do not
have a specific date. For additional information on the minimum distribution
rules that apply to payments under IRA 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.
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.
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).
19
<PAGE> 25
- --------------------------------------------------------------------------------
- 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.
- 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 One Year 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".
20
<PAGE> 26
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.
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 = (EQUALS) Any Applicable
Surrender
Charge and any
applicable taxes
</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 5 business 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.
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 $100 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. 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 Fixed Account Option
which 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> 27
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:
- - commencing 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 Payout Period.
If the Annuitant dies before the Payout 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 prior to your 86th 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;
- 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;
OR
- The greatest Account Value on any prior Seventh
Contract Anniversary plus any Purchase Payment
made after such Contract Anniversary
- (MINUS)
Amount of all prior withdrawals, charges and any
portion of Account Value applied under a Payout
Option made after such Contract Anniversary.
</TABLE>
If death occurs at the attained age of 86 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 may 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.
22
<PAGE> 28
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 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 Divisions' 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 $15,000
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 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 Return for a Division is
not available for a stated period, we may show the Standard Average Annual
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. 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 1-9 and 20-27, 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
$15,000. The Cumulative Return will be calculated without deduction of 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.
23
<PAGE> 29
- --------------------------------------------------------------------------------
ANNUAL CHANGE IN PURCHASE UNIT VALUE
Annual Change in Purchase Unit Value is a percentage change during a one year
period or since inception. 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 period or year;
- The difference is divided by the Purchase Unit Value at the start of the
period or year.
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 $15,000
We may show annual values based on an initial investment of $15,000. This will
not reflect any deduction for 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 THE AGSPC MONEY MARKET DIVISION
We may advertise the standardized yield performance for each Division other than
the AGSPC Money Market Division. The yield for each Division will be determined
as follows:
- We will divide the average daily net investment income per Purchase Unit 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 four 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.
24
<PAGE> 30
TABLE I
AVERAGE ANNUAL TOTAL RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH SURRENDER CHARGE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Money Market Fund (Division 26)....................... 01/16/86 -- 3.67% 3.23% (3.46)%
AIM V.I. International Equity Fund (Division 21)............ 05/05/93 17.35% -- 20.17 46.30
AIM V.I. Value Fund (Division 20)........................... 05/05/93 21.57 -- 25.48 21.45
Franklin Small Cap Fund -- Class 2 (Division 23)(1)......... 11/01/95 10.95 -- -- 87.23
One Group Investment Trust Balanced Portfolio (Division
9)........................................................ 08/01/94 13.05 -- 14.65 (0.04)
One Group Investment Trust Bond Portfolio (Division 7)(2)... 05/01/97 1.97 -- -- (9.45)
One Group Investment Trust Diversified Equity Portfolio
(Division 1)(2)........................................... 03/30/95 15.94 -- -- 0.88
One Group Investment Trust Diversified Mid Cap Portfolio
(Division 6)(2)........................................... 03/30/95 14.02 -- -- 2.24
One Group Investment Trust Equity Index Portfolio (Division
2)........................................................ 05/01/98 13.92 -- -- 12.73
One Group Investment Trust Government Bond Portfolio
(Division 7).............................................. 08/01/94 4.30 -- 4.97 (9.27)
One Group Investment Trust Large Cap Growth Portfolio
(Division 3).............................................. 08/01/94 24.35 -- 26.64 20.79
One Group Investment Trust Mid Cap Growth Portfolio
(Division 5).............................................. 08/01/94 21.84 -- 24.77 16.99
One Group Investment Trust Mid Cap Value Portfolio (Division
4)(2)..................................................... 05/01/97 0.33 -- -- (9.76)
Oppenheimer High Income Fund/VA (Division 25)............... 04/30/86 -- 11.38 8.42 (3.90)
Templeton Developing Markets Securities Fund -- Class 2
(Division 24)(3).......................................... 03/04/96 (7.67) -- -- 44.55
Van Kampen LIT Emerging Growth Portfolio (Division 22)...... 07/03/95 38.61 -- -- 95.07
Van Kampen LIT Enterprise Portfolio (Division 27)........... 04/07/86 -- 16.25 26.82 17.41
</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 1-9 and 20-27 will be shown when
it becomes available.
(1) Effective May 1, 2000 the Franklin Small Cap Investments Fund (previously
offered under the Contract) merged into the Franklin Small Cap Fund.
Accordingly, the performance figures in the Table for the Fund through
December 31, 1999, reflect the historical performance and inception date of
the Franklin Small Cap Fund and not the historical performance of the
Franklin Small Cap Investments Fund. Additionally, performance for Class 2
shares reflects a blended figure, combining: (a) for periods prior to Class
2's inception of January 6, 1999, historical results of Class 1 shares; and
(b) for periods after January 6, 1999, 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.
(2) The performance information and inception dates reflect that certain One
Group Investment Trust Portfolios are the accounting successors to the
financial history of certain Pegasus Variable Funds. Specifically, One Group
Investment Trust Bond Portfolio, One Group Investment Trust Diversified
Equity Portfolio, One Group Investment Trust Diversified Mid Cap Portfolio
and One Group Investment Trust Mid Cap Value Portfolio succeeded the
financial history of Pegasus Variable Bond Fund, Pegasus Variable Growth and
Value Fund, Pegasus Variable Mid-Cap Opportunity Fund and Pegasus Variable
Intrinsic Value Fund, respectively.
(3) Effective May 1, 2000 the Templeton Developing Markets Fund (previously
offered under the Contract) 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
December 31, 1999, 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.
25
<PAGE> 31
TABLE II
AVERAGE ANNUAL TOTAL RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH NO SURRENDER CHARGE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Money Market Fund (Division 26)....................... 01/16/86 -- 3.67% 3.93% 3.54%
AIM V.I. International Equity Fund (Division 21)............ 05/05/93 17.47% -- 20.55 53.30
AIM V.I. Value Fund (Division 20)........................... 05/05/93 21.67 -- 25.80 28.45
Franklin Small Cap Fund -- Class 2 (Division 23)(1)......... 11/01/95 28.29 -- -- 94.23
One Group Investment Trust Balanced Portfolio (Division
9)........................................................ 08/01/94 13.48 -- 15.11 6.96
One Group Investment Trust Bond Portfolio (Division 7)(2)... 05/01/97 4.46 -- -- (2.63)
One Group Investment Trust Diversified Equity Portfolio
(Division 1)(2)........................................... 03/30/95 16.53 -- -- 7.88
One Group Investment Trust Diversified Mid Cap Portfolio
(Division 6)(2)........................................... 03/30/95 14.65 -- -- 9.24
One Group Investment Trust Equity Index Portfolio (Division
2)........................................................ 05/01/98 17.72 -- -- 19.73
One Group Investment Trust Government Bond Portfolio
(Division 7).............................................. 08/01/94 4.90 -- 5.62 (2.44)
One Group Investment Trust Large Cap Growth Portfolio
(Division 3).............................................. 08/01/94 24.63 -- 26.95 27.79
One Group Investment Trust Mid Cap Growth Portfolio
(Division 5).............................................. 08/01/94 22.15 -- 25.10 23.99
One Group Investment Trust Mid Cap Value Portfolio (Division
4)(2)..................................................... 05/01/97 2.80 -- -- (2.97)
Oppenheimer High Income Fund/VA (Division 25)............... 04/30/86 -- 11.38 8.99 3.10
Templeton Developing Markets Securities Fund -- Class 2
(Division 24)(3).......................................... 03/04/96 (6.55) -- -- 51.55
Van Kampen LIT Emerging Growth Portfolio (Division 22)...... 07/03/95 38.96 -- -- 102.07
Van Kampen LIT Enterprise Portfolio (Division 27)........... 04/07/86 -- 16.25 27.12 24.41
</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 1-9 and 20-27 will be shown when
it becomes available.
(1) Effective May 1, 2000 the Franklin Small Cap Investments Fund (previously
offered under the Contract) merged into the Franklin Small Cap Fund.
Accordingly, the performance figures in the Table for the Fund through
December 31, 1999, reflect the historical performance and inception date of
the Franklin Small Cap Fund and not the historical performance of the
Franklin Small Cap Investments Fund. Additionally, performance for Class 2
shares reflects a blended figure, combining: (a) for periods prior to Class
2's inception of January 6, 1999, historical results of Class 1 shares; and
(b) for periods after January 6, 1999, 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.
(2) The performance information and inception dates reflect that certain One
Group Investment Trust Portfolios are the accounting successors to the
financial history of certain Pegasus Variable Funds. Specifically, One Group
Investment Trust Bond Portfolio, One Group Investment Trust Diversified
Equity Portfolio, One Group Investment Trust Diversified Mid Cap Portfolio
and One Group Investment Trust Mid Cap Value Portfolio succeeded the
financial history of Pegasus Variable Bond Fund, Pegasus Variable Growth and
Value Fund, Pegasus Variable Mid-Cap Opportunity Fund and Pegasus Variable
Intrinsic Value Fund, respectively.
(3) Effective May 1, 2000 the Templeton Developing Markets Fund (previously
offered under the Contract) 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
December 31, 1999, 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.
26
<PAGE> 32
TABLE III
CUMULATIVE RETURN
WITH NO SURRENDER CHARGE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Money Market Fund (Division 26)....................... 08/02/99 1.62% -- -- --
AIM V.I. International Equity Fund (Division 21)............ 08/02/99 45.55 -- -- --
AIM V.I. Value Fund (Division 20)........................... 08/02/99 15.86 -- -- --
Franklin Small Cap Fund -- Class 2 (Division 23)(1)......... 08/02/99 48.48 -- -- --
One Group Investment Trust Balanced Portfolio (Division
9)........................................................ 08/02/99 4.05 -- -- --
One Group Investment Trust Bond Portfolio (Division 7)...... 08/02/99 (0.25) -- -- --
One Group Investment Trust Diversified Equity Portfolio
(Division 1).............................................. 08/02/99 4.87 -- -- --
One Group Investment Trust Diversified Mid Cap Portfolio
(Division 6).............................................. 08/02/99 6.36 -- -- --
One Group Investment Trust Equity Index Portfolio (Division
2)........................................................ 08/02/99 10.45 -- -- --
One Group Investment Trust Government Bond Portfolio
(Division 7).............................................. 08/02/99 0.27 -- -- --
One Group Investment Trust Large Cap Growth Portfolio
(Division 3).............................................. 08/02/99 18.83 -- -- --
One Group Investment Trust Mid Cap Growth Portfolio
(Division 5).............................................. 08/02/99 23.23 -- -- --
One Group Investment Trust Mid Cap Value Portfolio (Division
4)........................................................ 08/02/99 (1.75) -- -- --
Oppenheimer High Income Fund/VA (Division 25)............... 08/02/99 (0.38) -- -- --
Templeton Developing Markets Securities Fund -- Class 2
(Division 24)(2).......................................... 08/02/99 16.54 -- -- --
Van Kampen LIT Emerging Growth Portfolio (Division 22)...... 08/02/99 69.22 -- -- --
Van Kampen LIT Enterprise Portfolio (Division 27)........... 08/02/99 20.92 -- -- --
</TABLE>
- ---------------
* The performance figures in the Table reflect the investment performance for
the Divisions for the stated periods and should not be used to infer that
future performance will be the same.
(1) Effective May 1, 2000 the Franklin Small Cap Investments Fund (previously
offered under the Contract) merged into the Franklin Small Cap Fund. Also
effective with this merger, the Franklin Small Cap Investments Fund Division
23 was renamed the Franklin Small Cap Fund Division 23. Accordingly, the
performance figures in the Table for the Division through December 31, 1999,
reflect the actual historical performance of the Franklin Small Cap
Investments Fund Division 23.
(2) Effective May 1, 2000 the Templeton Developing Markets Fund (previously
offered under the Contract) 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. Also effective with this merger, the Templeton Developing Markets Fund
Division 24 was renamed the Templeton Developing Markets Securities Fund
Division 24. Accordingly, the performance figures in the Table for the
Division through December 31, 1999, reflect the actual historical
performance of the Templeton Developing Markets Fund Division 24.
27
<PAGE> 33
TABLE IV
CUMULATIVE RETURN OF AN INVESTMENT
IN A HYPOTHETICAL CONTRACT* WITH NO SURRENDER CHARGE IMPOSED
(FROM UNDERLYING FUND INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
FUND
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Money Market Fund (Division 26)....................... 01/16/86 -- 43.43% 21.23% 3.54%
AIM V.I. International Equity Fund (Division 21)............ 05/05/93 192.20% -- 154.56 53.30
AIM V.I. Value Fund (Division 20)........................... 05/05/93 269.28 -- 215.04 28.45
Franklin Small Cap Investments Fund -- Class 2 (Division
23)(1).................................................... 11/01/95 187.61 -- -- 94.23
One Group Investment Trust Balanced Portfolio (Division
9)........................................................ 08/01/94 98.44 -- 102.08 6.96
One Group Investment Trust Bond Portfolio (Division 7)(2)... 05/01/97 12.36 -- -- (2.63)
One Group Investment Trust Diversified Equity Portfolio
(Division 1)(2)........................................... 03/30/95 107.16 -- -- 7.88
One Group Investment Trust Diversified Mid Cap Portfolio
(Division 6)(2)........................................... 03/30/95 91.72 -- -- 9.24
One Group Investment Trust Equity Index Portfolio (Division
2)........................................................ 05/01/98 31.32 -- -- 19.73
One Group Investment Trust Government Bond Portfolio
(Division 7).............................................. 08/01/94 29.61 -- 31.42 (2.44)
One Group Investment Trust Large Cap Growth Portfolio
(Division 3).............................................. 08/01/94 229.82 -- 229.69 27.79
One Group Investment Trust Mid Cap Growth Portfolio
(Division 5).............................................. 08/01/94 195.78 -- 206.42 23.99
One Group Investment Trust Mid Cap Value Portfolio (Division
4)(2)..................................................... 05/01/97 7.66 -- -- (2.97)
Oppenheimer High Income Fund/VA (Division 25)............... 04/30/86 -- 193.71 53.81 3.10
Templeton Developing Markets Fund Class 2 (Division
24)(3).................................................... 03/04/96 (22.86) -- -- 51.55
Van Kampen LIT Emerging Growth Portfolio (Division 22)...... 07/03/95 339.52 -- -- 102.07
Van Kampen LIT Enterprise Portfolio (Division 27)........... 04/07/86 -- 350.88 232.00 24.41
</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 1-9 and 20-27 will be shown when
it becomes available.
(1) Effective May 1, 2000 the Franklin Small Cap Investments Fund (previously
offered under the Contract) merged into the Franklin Small Cap Fund.
Accordingly, the performance figures in the Table for the Fund through
December 31, 1999, reflect the historical performance and inception date of
the Franklin Small Cap Fund and not the historical performance and inception
date of the Franklin Small Cap Investments Fund. Additionally, performance
for Class 2 shares reflects a blended figure, combining: (a) for periods
prior to Class 2's inception of January 6, 1999, historical results of Class
1 shares; and (b) for periods after January 6, 1999, 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.
(2) The performance information and inception dates reflect that certain One
Group Investment Trust Portfolios are the accounting successors to the
financial history of certain Pegasus Variable Funds. Specifically, One Group
Investment Trust Bond Portfolio, One Group Investment Trust Diversified
Equity Portfolio, One Group Investment Trust Diversified Mid Cap Portfolio
and One Group Investment Trust Mid Cap Value Portfolio succeeded the
financial history of Pegasus Variable Bond Fund, Pegasus Variable Growth and
Value Fund, Pegasus Variable Mid-Cap Opportunity Fund and Pegasus Variable
Intrinsic Value Fund, respectively.
(3) Effective May 1, 2000 the Templeton Developing Markets Fund (previously
offered under the Contract) 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
December 31, 1999, 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.
28
<PAGE> 34
OTHER CONTRACT FEATURES
- --------------------------------------------------------------------------------
CHANGE OF BENEFICIARY
The Beneficiary (if not irrevocable) may usually be changed at any time.
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 5 business days after receipt of the Contract within
the required period. The refund amount will be your Purchase Payment, which,
depending on state law, will be 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> 35
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, other unaffiliated insurance 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> 36
FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
The Contract provides tax-deferred accumulation over time, but is subject to
federal income and 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 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 a Section
408(b) IRA or is instead a nonqualified Contract.
Section 408(b) individual retirement annuities are "Qualified Contracts."
Certain series of the Contract may also be available through a nondeductible
Section 408A "Roth" individual retirement annuity.
In addition, the Contract is also available through "Non-Qualified Contracts."
Such Non-Qualified Contracts include 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 pre-tax or after-tax
contributions by individuals, depending on the type of retirement program.
After-tax contributions constitute "investment in the Contract." A Qualified
Contract receives 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 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.
31
<PAGE> 37
- --------------------------------------------------------------------------------
EFFECT OF TAX-DEFERRED ACCUMULATIONS
The chart below compares the results of
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-deferred plan such as a 408(b)
individual retirement 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 surrender charges. An additional
10% tax penalty 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-favored retirement
programs and Non-Qualified Contracts generally provide tax-deferred treatment on
earnings. In addition, Premium Payments made to tax-favored retirement programs
ordinarily are not subject to income tax until withdrawn. As shown above,
investing in a tax-favored 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-favored 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-FAVORED PROGRAM WILL BE
REDUCED BY THE IMPACT OF 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 taxes, contributions to
tax-favored 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 below illustrates this
principle by comparing a pre-tax contribution to a tax-favored retirement plan
with an after-tax contribution to a conventional savings account:
PAYCHECK COMPARISON
<TABLE>
<CAPTION>
TAX-FAVORED 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
contribution 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-favored program, subject to being taxed upon withdrawal. Stated otherwise,
to reach an annual retirement savings goal of $2,000, the contribution to a tax-
favored 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. The tax-favored
retirement program represented in this chart is a Section 408(b) individual
retirement annuity, which allows the Contract Owner to exclude contributions,
within limits, from gross income.
32
<PAGE> 38
YEAR 2000
- --------------------------------------------------------------------------------
As of March 10, 2000, all of our ultimate parent, American General Corporation's
("AGC") major technology systems, programs, and applications, including those
which rely on third parties, are operating smoothly following our transition
into 2000. We have experienced no interruptions to normal business operations,
including the processing of customer account data and transactions. We will
continue to monitor our technology systems, including critical third party
dependencies, as necessary to maintain our Year 2000 readiness. We do not expect
any future disruptions, if they occur, to have a material effect on the
company's results of operations, liquidity, or financial condition.
Through December 31, 1999, AGC incurred and expensed pretax costs of $98 million
related to Year 2000 readiness, including $18 million in 1999 and $65 million in
1998. In 1999, Year 2000 readiness expenses were included in division earnings.
The 1998 expenses were excluded from division earnings, consistent with the
manner in which we reviewed division results. In addition, we accelerated the
planned replacement of certain systems as part of our Year 2000 plans. The cost
of these replacement systems was immaterial. We do not anticipate incurring any
significant costs in the future to maintain Year 2000 readiness.
33
<PAGE> 39
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<PAGE> 40
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
1-877-888-9859.
................................................................................
THE CONTRACTS
Please send me a free copy of the Statement of Additional Information for A.G.
Separate Account A (The One Multi-Manager Annuity).
(Please Print or Type)
Name: ____________________________ Policy # _______________________
Address: _________________________
__________________________________
Social Security Number: __________
<PAGE> 41
(This page intentionally left blank)
<PAGE> 42
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.............................. 7
Special Tax Consequences -- Required
Distributions............................. 8
Tax Free Rollovers, Transfers and
Exchanges................................. 8
Calculation of Surrender Charge.................. 10
Illustration of Surrender Charge on Total
Surrender................................. 10
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................. 10
Purchase Unit Value.............................. 11
Illustration of Calculation of Purchase Unit
Value..................................... 11
Illustration of Purchase of Purchase Units... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Calculations......................... 11
AGSPC Money Market Division Yields........... 11
Illustration of Calculation of Current Yield
for AGSPC Money Market Division
Twenty-Six................................ 11
Illustration of Calculation of Effective
Yield for AGSPC Money Market Division
Twenty-Six................................ 12
Standardized Yield for Bond Fund Divisions....... 12
Illustration of Calculation of Standardized
Yield for Bond Fund Divisions............. 12
Calculation of Average Annual Total Return... 13
Performance Information.......................... 14
Payout Payments.............................. 15
Assumed Investment Rate...................... 15
Amount of Payout Payments.................... 15
Payout Unit Value............................ 15
Illustration of Calculation of Payout Unit
Value..................................... 16
Illustration of Payout Payments.............. 16
Distribution of Variable Annuity Contracts....... 17
Experts.......................................... 17
Comments on Financial Statements................. 17
</TABLE>
<PAGE> 43
(This page intentionally left blank)
<PAGE> 44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR ADDITIONAL INFORMATION ABOUT THE CONTRACTS
CONTACT THE ANNUITY SERVICE CENTER:
<TABLE>
<S> <C> <C>
P.O. Box 4342 2727-A Allen Parkway
Houston, Texas 77210-4342 or Houston, Texas 77019
1-877-888-9859
</TABLE>
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
1-877-888-9859
FOR UNIT VALUE INFORMATION CALL: 1-877-888-9859
FOR ASSET TRANSFERS BY TELEPHONE CALL: 1-877-888-9859
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 45
[AMERCAN GENERAL FINANCIAL GROUP LOGO]
THE ONE(R) MULTI-MANAGER ANNUITY(SM)
IS ISSUED BY AMERICAN GENERAL
ANNUITY INSURANCE COMPANY
Executive Offices: Houston, Texas
Annuity Service Center:
2727-A Allen Parkway
Houston, Texas 77019
1-877-888-9859
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> 46
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
A.G. SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER FLEXIBLE PREMIUM
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS
THE ONE(R) MULTI-MANAGER ANNUITY SM
--------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------
FORM N-4 PART B
MAY 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 Flexible
Premium Individual Fixed and Variable Deferred Annuity Contracts dated May 1,
2000 (the "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 2727-A Allen Parkway, Houston, Texas 77019;
1-877-888-9859. Prospectuses are also available from registered sales
representatives.
1
<PAGE> 47
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.............................. 7
Special Tax Consequences -- Required
Distributions............................. 8
Tax Free Rollovers, Transfers and
Exchanges................................. 8
Calculation of Surrender Charge.................. 10
Illustration of Surrender Charge on Total
Surrender................................. 10
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................. 10
Purchase Unit Value.............................. 11
Illustration of Calculation of Purchase Unit
Value..................................... 11
Illustration of Purchase of Purchase Units... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Calculations......................... 11
AGSPC Money Market Division Yields........... 11
Illustration of Calculation of Current Yield
for AGSPC Money Market Division
Twenty-Six................................ 11
Illustration of Calculation of Effective
Yield for AGSPC Money Market Division
Twenty-Six................................ 12
Standardized Yield for Bond Fund Divisions....... 12
Illustration of Calculation of Standardized
Yield for Bond Fund Divisions............. 12
Calculation of Average Annual Total Return... 13
Performance Information.......................... 14
Payout Payments.............................. 15
Assumed Investment Rate...................... 15
Amount of Payout Payments.................... 15
Payout Unit Value............................ 15
Illustration of Calculation of Payout Unit
Value..................................... 16
Illustration of Payout Payments.............. 16
Distribution of Variable Annuity Contracts....... 17
Experts.......................................... 17
Comments on Financial Statements................. 17
</TABLE>
2
<PAGE> 48
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. Furthermore, 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 it 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 certain 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, ("EAFE") 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 refer from time-to-time to
portfolio rebalancing and or asset allocation for certain Divisions of A.G.
Separate Account A.
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), a
wholly owned subsidiary of A I M Management Group Inc. (AIM Management), as
investment adviser to the AIM V.I. International Equity Fund (underlying
Division Twenty-One) and the AIM V.I. Value Fund (underlying Division Twenty).
AIM has acted as an investment advisor 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 One Group(R) Investment Trust
and/or Banc One Investment Advisors Corporation as investment adviser to One
Group Investment Trust Balanced Portfolio (underlying Division Nine), One Group
Investment Trust Bond Portfolio (underlying Division Eight), One Group
Investment Trust Diversified Equity Portfolio (underlying Division One), One
Group Investment Trust Diversified Mid Cap Portfolio (underlying Division Six),
One Group Investment Trust Equity Index Portfolio (underlying Division Two), One
Group Investment Trust Government Bond Portfolio (underlying Division Eight),
One Group Investment Trust Large Cap Growth Portfolio (underlying Division
Three), One Group Investment Trust Mid Cap Growth Portfolio (underlying Division
Five) and One Group Investment Trust Mid Cap Value Portfolio (underlying
Division Four). Banc One Investment Advisors has served as investment advisor to
One Group Investment Trust since its inception. In addition, Banc One Investment
Advisors serves as investment advisor to other mutual funds and individual,
corporate, charitable, and retirement accounts. As of December 31, 1999, Banc
One Investment Advisors, an indirect wholly-owned subsidiary of Bank One
Corporation, managed over $127 billion in assets.
The Company may, from time-to-time refer to OppenheimerFunds, Inc.
(OppenheimerFunds) as investment adviser to the Oppenheimer High Income Fund/VA
(underlying Division Twenty-Five). OppenheimerFunds is one of the largest and
most respected investment managers in the mutual fund business. Founded in 1959,
OppenheimerFunds (and its subsidiary) manages more than $120 billion in more
than a million mutual
3
<PAGE> 49
fund accounts as of December 31, 1999. OppenheimerFunds 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 Franklin Advisers, Inc., as
investment adviser to the Franklin Small Cap Fund -- Class 2 (underlying
Division Twenty-Three) and Templeton Asset Management Ltd., as investment
advisor to the Templeton Developing Markets Securities Fund -- Class 2
(underlying Division Twenty-Four). Franklin(R) Templeton(R) has served investors
for more than fifty years, having grown from a small family of funds to a global
financial services leader. Today, FranklinTempleton serves more than 7 million
shareholders, who, as of November 30, 1999, have entrusted FranklinTempleton
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 Twenty-Two) and Van Kampen LIT Enterprise
Portfolio (underlying Division Twenty-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 Twenty-Six).
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 include those which 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.
The Company may, from time to time, refer to The Variable Annuity Research
& Data Services (VARDS) Report. The VARDS Report offers
4
<PAGE> 50
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 Contracts will be sold to individuals in the
Non-Qualified market. A smaller number of these contracts will be sold in the
Qualified market through 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 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.
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
5
<PAGE> 51
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
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 fully deductible 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 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 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
less than $15,000, or the limit in (ii) by less than $10,000. 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 percentage of
participating employees' compensation. Employer contributions are excludable
from employees' taxable income and, after 1993, cannot exceed the lesser of
$30,000 or 15% of your compensation.
Through 1996, employees of certain small employers (other than tax-exempt
organizations) were permitted to establish plans allowing employees to
contribute pre tax, 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,
6
<PAGE> 52
may still allow employees to make these contributions.
SIMPLE IRA. Employer and employee 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
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, were 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 the taxpayer's
first 408A "Roth" IRA. The five-year holding period may be different for
determining whether a distribution allocable 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
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) if the distribution is in the form of substantially equal periodic payments
over the life (or life expectancy) of the Contract Owner (or the Contract
Owner and Beneficiary); and
(4) distributions that do not exceed the employee's tax-deductible medical
expenses for the taxable year of receipt.
Certain distributions from a SIMPLE IRA within two years after first
participating in the plan
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<PAGE> 53
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:
(5) distributions up to $10,000 (in the aggregate) to cover costs of acquiring,
constructing or reconstructing the residence of a first-time homebuyer;
(6) distributions to cover certain costs of higher education, such as tuition,
fees, books, supplies and equipment, for the IRA owner, a spouse, child or
grandchild; and
(7) 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 and exceptions as other IRAs.
SPECIAL TAX CONSEQUENCES -- REQUIRED
DISTRIBUTIONS
408(b) IRAs, SEPs and SIMPLE IRAs. Generally, minimum required
distributions must commence no later than April 1 of the calendar year following
the calendar year in which the owner attains age 70 1/2. Required distributions
must be made over a period that does not exceed the life or life expectancies of
the owner (or lives or joint life expectancies of the owner 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.
At the owner'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
owner and in effect at the time of death.
A Contract Owner 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
408(b) IRAs, SEPs and SIMPLE IRAs 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 Contract Owner'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 Contract Owner at the time of death.
TAX-FREE ROLLOVERS, TRANSFERS AND EXCHANGES
408(b) IRAs. Funds may be rolled over 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 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 a joint return; and
(ii) are not married filing separate returns.
8
<PAGE> 54
Special, complicated rules governing holding periods, avoidance of 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 SEP IRA only to another 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.
9
<PAGE> 55
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 $15,000
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 Payments (Assumes
Account Value is $50,000) 44,000
</TABLE>
Assume the Account Value at the time of full withdrawal is $50,000
(7/1/00). 10% of $50,000 ($5,000) is not subject to Surrender Charge.
The total Surrender Charge is:
(15,000 - 5,000) * 2% + 5,000 * 4% + 15,000 * 5% + 2,000 * 5% + 3,000 * 7% +
4,000 * 7% = $1,740.
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 $15,000
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 contract year, calculate
free withdrawal amount (10% of the value as of the date of withdrawal)
10% * $44,000 = $4,400 (no charge on this 10% withdrawal)
b. The Account Value upon which Surrender Charge on the Full Surrender may be
calculated is
$44,000 -- $4,400 = $39,600
c. The Surrender Charge is
(15,000 -- 4,400) * 2% + 5,000 * 4% + 15,000 * 5% + 2,000 * 5% + 3,000 * 7% +
4,000 * 7% = $1,752.
10
<PAGE> 56
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
AGSPC MONEY MARKET DIVISION YIELDS
ILLUSTRATION OF CALCULATION OF CURRENT YIELD FOR AGSPC MONEY MARKET DIVISION
TWENTY-SIX
Example 5.
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.
11
<PAGE> 57
ILLUSTRATION OF CALCULATION OF EFFECTIVE YIELD FOR AGSPC MONEY MARKET DIVISION
TWENTY-SIX
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:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] -1
The 7-Day Effective Yield for the AGSPC Money Market Division Twenty-Six
will be shown when it becomes available.
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.
12
<PAGE> 58
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for the 1, 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, 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, 5 or 10 year periods
of a hypothetical $1,000 Purchase Payment made at the
beginning of the 1, 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, 5 or 10 year
period and deduction of all nonrecurring charges at the end of each such period.
13
<PAGE> 59
PERFORMANCE INFORMATION
The performance calculations for the Divisions, and the methods used for
calculating them, are explained in the prospectus. (See "How To Review
Investment Performance of Separate Account Divisions" and "Variable Account
Options" in the prospectus.)
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 Money Market Fund Division Twenty-Six may be
compared to the Certificate of Deposit Primary Offering by New York City Banks,
30 Day Index.
The performance of the AIM V.I. International Equity Fund Division Sixteen
may be compared to the Morgan Stanley Capital International ("MSCI") EAFE Index.
The performance of the AIM V.I. Value Fund Division Twenty may be compared
to the Standard & Poor's(R) Corporation ("S&P(R)")* Composite Stock Price Index
("S&P(R) 500 Index").
The performance of the Franklin Small Cap Fund Division Twenty-Three may be
compared to S&P 500 Index and the Russell 2500** Index.
The performance of the One Group Investment Trust Balanced Portfolio
Division Nine may be compared to the S&P 500 Index, the Lehman Brothers
Intermediate Government/Corporate Bond Index and the Lipper Balanced Funds
Index.
The performance of the One Group Investment Trust Bond Portfolio Division
Eight may be compared to the Lehman Brothers Aggregate Bond Index.
The performance of the One Group Investment Trust Diversified Equity
Portfolio Division One may be compared to the S&P 1500 Super Composite Index.
The performance of the One Group Investment Trust Diversified Mid Cap
Portfolio Division Six may be compared to the S&P Mid Cap 400 Index.
The performance of the One Group Investment Trust Equity Index Portfolio
Division Two may be compared to the S&P 500 Index.
The performance of the One Group Investment Trust Government Bond Portfolio
Division Seven may be compared to the Salomon Brothers 3-7 Year Treasury Index
and the Lehman Brothers Government Bond Index.
The performance of the One Group Investment Trust Large Cap Growth Division
Three may be compared to the S&P 500/BARRA Growth Index.
The performance of the One Group Investment Trust Mid Cap Growth Portfolio
Division Five may be compared to the S&P Mid Cap 400/BARRA Growth Index.
The performance of the One Group Investment Trust Mid Cap Value Portfolio
Division Four may be compared to the S&P Mid Cap 400/BARRA Value Index.
The performance of the Oppenheimer High Income Fund/VA Division Twenty-Five
may be compared to the Merrill Lynch High Yield Master Index.
The performance of the Templeton Developing Markets Securities Fund
Division Twenty-Four may be compared to the MSCI World Index.
The performance of the Van Kampen LIT Emerging Growth Portfolio Division
Twenty-Two may be compared to the Russell 2000 Stock Index and the S&P Mid-Cap
400 Index.
The performance of the Van Kampen LIT Enterprise Portfolio Division
Twenty-Seven may be compared to the S&P 500 Index.
- ---------------
* "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "S&P 1500(R)" and S&P MidCap
400(R)" are trademarks of Standard and Poor's ("S&P").
** The "Russell 2500(R) Index", 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.
14
<PAGE> 60
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."
15
<PAGE> 61
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>
16
<PAGE> 62
DISTRIBUTION OF VARIABLE ANNUITY
CONTRACTS
The Company has qualified or intends to qualify the Contracts for sale in
13 states 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 7% 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. Sales commissions paid for the year 1999 were
$1,653,043. Distributor retained $0 in Commissions for the year 1999.
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 report 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 statement contained herein reflect the
composition of the Separate Account as of December 31, 1999, and for the year
then ended.
17
<PAGE> 63
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
PRINTED IN U.S.A. 5/00
Recycled Paper --RECYCLED PAPER LOGO--
<PAGE> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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> 71
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
<PAGE> 72
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
<PAGE> 73
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
<PAGE> 74
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
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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> 76
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
<PAGE> 77
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> 78
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> 79
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> 80
================================================================================
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> 81
================================================================================
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> 82
================================================================================
2 FINANCIAL STATEMENTS
================================================================================
[INTENTIONALLY LEFT BLANK]
<PAGE> 83
================================================================================
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> 84
================================================================================
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> 85
================================================================================
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> 86
================================================================================
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> 87
================================================================================
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> 88
================================================================================
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> 89
================================================================================
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> 90
================================================================================
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> 91
================================================================================
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> 92
================================================================================
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> 93
================================================================================
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> 94
==============================================================================
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> 95
================================================================================
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> 96
================================================================================
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> 97
===============================================================================
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> 98
================================================================================
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> 99
===============================================================================
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> 100
================================================================================
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> 101
===============================================================================
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> 102
================================================================================
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> 103
================================================================================
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> 104
================================================================================
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> 105
================================================================================
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> 106
================================================================================
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> 107
================================================================================
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> 108
================================================================================
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> 109
================================================================================
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> 110
================================================================================
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> 111
================================================================================
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> 112
================================================================================
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> 113
================================================================================
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> 114
================================================================================
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> 115
================================================================================
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> 116
================================================================================
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> 117
================================================================================
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> 118
================================================================================
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> 119
================================================================================
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> 120
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of 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. -- Individual Fixed and Variable Deferred Annuity Contract.
5. -- Application Form.
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) Form of Participation Agreement between American
General Annuity Insurance Company, American General
Series Portfolio Company and The Variable Annuity Life
Insurance Company.****
-- (ii)(A) Form of Participation Agreement between American
General Annuity Insurance Company, Banc One Investment
Advisors Corporation, Nationwide Advisory Services,
Inc. and Nationwide Investors Services, Inc.****
-- (ii)(B) Form of Amendment to Fund Participation Agreement
between American General Annuity Insurance Company,
One Group Investment Trust, Banc One Investment
Advisors Corporation and One Group Administrative
Services, Inc. dated as of January 1, 2000. (Filed
herewith)
-- (iii)(A) Participation Agreement between American General
Annuity Insurance Company, Van Kampen Life Investment
Trust, Van Kampen Funds, Inc., and Van Kampen Asset
Management Inc. dated February 25, 1999.****
-- (iii)(B) Form of Administrative Services Agreement between
American General Annuity Insurance Company and Van
Kampen Asset Management Inc. (Filed herewith)
-- (iv) 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)(A) Participation Agreement between American General Annuity
Insurance Company, AIM Variable Insurance Funds, Inc.,
A I M Distributors, Inc. and AGA Brokerage Services,
Inc. dated November 23, 1998.****
-- (v)(B) Form of Administrative Services Agreement between
American General Annuity Insurance Company and A I M
Advisors, Inc. (Filed herewith)
-- (vi) Form of Amendment No. 1 to Participation Agreement
between American General Annuity Insurance Company, AIM
Variable Insurance Funds, Inc., A I M Distributors, Inc.
and AGA Brokerage Services, Inc.****
-- (vii)(A) Participation Agreement between American General
Annuity Insurance Company Oppenheimer Variable Account
Funds, and Oppenheimer Funds, Inc. dated November 23,
1998.****
-- (vii)(B) Form of Administrative Services Agreement between
Oppenheimer Funds, Inc. and American General Annuity
Insurance Company. (Filed herewith)
-- (viii) First Amendment to Participation Agreement between
American General Annuity Insurance Company, Oppenheimer
Variable Account Funds, and Oppenheimer Funds, Inc. dated
November 23, 1998.****
-- (ix) Form of Second Amendment to Participation Agreement
between American General Annuity Insurance Company, Oppenheimer
Variable Account Funds, and Oppenheimer Funds, Inc.****
-- (x) Participation Agreement between American General Annuity
Insurance Company, Templeton Variable Products Series Fund and
Franklin Templeton Distributors, Inc. dated November 23,
1998.****
-- (xi) Form of Amendment No. 1 to Participation Agreement between
American General Annuity Insurance Company, Templeton Variable
Products Series Fund and Franklin Templeton Distributors,
Inc.****
-- (xii) 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. (Filed herewith)
-- (xiii) Form of Administrative Services Agreement between
American General Annuity Insurance Company Franklin Templeton
Services, Inc. (Filed herewith)
9. -- Not Applicable
10. -- Consent of Independent Auditors. (Filed herewith)
11. -- Not applicable.
</TABLE>
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<PAGE> 121
<TABLE>
<S> <C>
12. -- Not applicable.
13. -- Calculation of Performance Information.****
14. -- Not applicable.
15. -- Copies of manually signed powers of attorney for American
General Annuity Insurance Company Directors Kent E. Barrett,
Carl J. Santillo, Robert P. London, Rebecca G. Campbell, Bruce
R. Abrams and John A. Graf.(Filed herewith)
</TABLE>
- ---------------
* Incorporated by reference to Post Effective Amendment No. 7 Registrant's
Form N-4 Registration Statement as filed on April 29, 1999 (File No.
033-86464).
** 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 Pre-Effective Amendment No. 2 to Registrant's
Form N-4 Registration Statement as electronically filed on July 16, 1999
(File No. 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
</TABLE>
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<PAGE> 122
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES HELD WITH DEPOSITOR
------------------- -----------------------------------------
<S> <C>
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
Stephen R. Duff ............................. Vice President - New Account Acquisitions
- AGAIC
Sharla A. Jackson............................ Vice President - Customer Service -
Amarillo - AGAIC
Stephen J. Poston............................ Vice President - Training and
National Accounts - 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> 123
<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>
The principal business address is 2929 Allen Parkway, Houston, Texas 77019.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The following is a list of American General Corporation's subsidiaries as of
February 29, 2000. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and unless
otherwise indicated, all subsidiaries are wholly owned. Inactive subsidiaries
are denoted by an asterisk (*).
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
AGC Life Insurance Company ..................................................... Missouri
American General Property Insurance Company(16) ............................. Tennessee
American General Property Insurance Company of Florida ................... Florida
American General Life and Accident Insurance Company(6) ..................... Tennessee
American General Life Insurance Company(7) .................................. Texas
American General Annuity Service Corporation ............................. Texas
American General Life Companies .......................................... Delaware
American General Life Insurance Company of New York ..................... New York
The Winchester Agency Ltd. ............................................ New York
The Variable Annuity Life Insurance Company .............................. Texas
Parkway 1999 Trust(17) ................................................ Maryland
PESCO Plus, Inc(14) ................................................... Delaware
American General Gateway Services, L.L.C(15) .......................... Delaware
The Variable Annuity Marketing Company ................................ Texas
American General Financial Advisors, Inc............................... Texas
VALIC Retirement Services Company ..................................... Texas
VALIC Trust Company ................................................... Texas
American General Assignment Corporation of New York ................... New York
The Franklin Life Insurance Company ......................................... Illinois
The American Franklin Life Insurance Company ............................. Illinois
Franklin Financial Services Corporation .................................. Delaware
HBC Development Corporation ................................................. Virginia
Templeton American General Life of Bermuda, Ltd(13) ......................... Bermuda
Western National Corporation................................................. Delaware
WNL Holding Corp.......................................................... Delaware
American General Annuity Insurance Company ............................ Texas
American General Assignment Corporation ............................... Texas
American General Distributors, Inc. ................................... Delaware
A.G. Investment Advisory Services, Inc. ............................... Delaware
American General Financial Institutions Group, Inc..................... Delaware
WNL Insurance Services, Inc. .......................................... Delaware
American General International, Inc. ........................................... Delaware
American General Enterprise Services, Inc. ..................................... Delaware
American General Corporation* .................................................. Delaware
American General Delaware Management Corporation(1) ............................ Delaware
American General Finance, Inc. ................................................. Indiana
</TABLE>
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<PAGE> 124
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
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 Investment Advisory Services, Inc.* .......................... Texas
American General Investment Holding Corporation(10) ............................ Delaware
American General Investment Management, L.P.(10) ............................ Delaware
American General Investment Management Corporation(10) ......................... Delaware
American General Realty Advisors, Inc. ......................................... Delaware
American General Realty Investment Corporation ................................. Texas
AGLL Corporation(11) ........................................................ Delaware
American General Land Holding Company Delaware
AG Land Associates, LLC(11) .............................................. California
GDI Holding, Inc.*(12) ...................................................... California
Pebble Creek Service Corporation Florida
SR/HP/CM Corporation ........................................................ Texas
Green Hills Corporation ........................................................ Delaware
Knickerbocker Corporation ...................................................... Texas
American Athletic Club, Inc. ................................................ Texas
Pavilions Corporation........................................................... Delaware
USLIFE Corporation.............................................................. Delaware
All American Life Insurance Company.......................................... Illinois
American General Assurance Company........................................... Illinois
American General Indemnity Company........................................ Nebraska
USLIFE Credit Life Insurance Company of Arizona........................... Arizona
American General Life Insurance Company of Pennsylvania...................... Pennsylvania
I.C. Cal*.................................................................... California
North Central Administrators, Inc............................................ Minnesota
North Central Life Insurance Company......................................... Minnesota
North Central Caribbean Life, Ltd......................................... Nevis
The Old Line Life Insurance Company of America............................... Wisconsin
The United States Life Insurance Company in the City of New York New York
</TABLE>
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<PAGE> 125
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
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 o AGC became the
direct owners of the indicated percentages of membership units of SBIL B,
L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%). Through their aggregate 40.3% interest
in SBIL B, VALIC, FL, AGLA and AGL indirectly own approximately 28% of the
securities of SBI, an English company, and 14% of the securities of ESBL,
an English company, SBP, an English company, and SBFL, a Cayman Islands
company. These interests are held for investment purposes only.
(5) Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional
Provincial Pensions S.A. de C.V., a new holding company formed by GNP, one
of Mexico's largest financial services companies.
(6) AGLA owns approximately 12% of Whirlpool Financial Corp ("Whirlpool")
preferred stock. AGLA's holdings in Whirlpool represents approximately 3%
of the voting power of the capital
C-6
<PAGE> 126
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.
(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 PESC 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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COMPANY ABBREVIATIONS AS USED IN ITEM 26:
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
AAL All American Life Insurance Company..................................... IL
AAth American Athletic Club, Inc. ........................................... TX
AFLI The American Franklin Life Insurance Company ........................... IL
AGAIC American General Annuity Insurance Company ............................. TX
ASGN-NY American General Assignment Corporation of New York .................... NY
AGAC American General Assurance Company...................................... IL
AGAS American General Annuity Service Corporation ........................... TX
AGBS American General Distributors, Inc. .................................... DE
AGB American General Bank, FSB ............................................. UT
AGC American General Corporation ........................................... TX
AGCL AGC Life Insurance Company ............................................. MO
AGDMC American General Delaware Management Corporation ....................... DE
AGES American General Enterprise Services, Inc. ............................. DE
AGF American General Finance, Inc. ......................................... IN
AGFC American General Finance Corporation ................................... IN
AGFCI American General Financial Center, Incorporated ........................ IN
AGFCT American General Financial Center Thrift Company ....................... CA
AGFG American General Finance Group, Inc. ................................... DE
AGF Inv AGF Investment Corp. ................................................... IN
AGFn A.G. Financial Service Center, Inc. .................................... UT
AGFnC American General Financial Center, Inc. ................................ IN
AGFS American General Financial Services, Inc. .............................. DE
AGFA American General Financial Advisors, Inc................................ TX
AGFIG American General Financial Institutions Group, Inc. ................... DE
AGGS American General Gateway Services, L.L.C................................ DE
AGIA American General Insurance Agency, Inc. ................................ MO
AGIAH American General Insurance Agency of Hawaii, Inc. ...................... HI
AGIAM American General Insurance Agency of
Massachusetts, Inc. ................................................ MA
AGIAO American General Insurance Agency of Ohio, Inc. OH
AGIAOK American General Insurance Agency of Oklahoma, Inc. .................... OK
AGIAS A.G. Investment Advisory Services, Inc.................................. DE
AGIAT American General Insurance Agency of Texas, Inc TX
AGII American General International, Inc. DE
AGIHC American General Investment Holding Corporation DE
AGIM American General Investment Management, L.P. DE
AGIMC American General Investment Management Corporation DE
AGIND American General Indemnity Company...................................... NE
</TABLE>
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<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
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
AGRA American General Realty Advisors, Inc. ................................. DE
AGRI American General Realty Investment Corporation ......................... TX
AGSI American General Securities Incorporated ............................... TX
AGX American General Exchange, Inc. ........................................ TN
ASGN American General Assignment Corporation................................. TX
FFSC Franklin Financial Services Corporation ................................ DE
FL The Franklin Life Insurance Company .................................... IL
GHC Green Hills Corporation ................................................ DE
HBDC HBC Development Corporation............................................. VA
KC Knickerbocker Corporation .............................................. TX
ML Merit Life Insurance Co. ............................................... IN
NLA The National Life and Accident Insurance Company ....................... TX
NCA North Central Administrators, Inc. ..................................... MN
NCL North Central Life Insurance Company.................................... MN
NCCL North Central Caribbean Life, Ltd....................................... T&C
OLL The Old Line Life Insurance Company of America.......................... WI
PKWY Parkway 1999 Trust...................................................... MD
PAV Pavilions Corporation................................................... DE
PCSC Pebble Creek Service Corporation ....................................... FL
PIFLA American General Property Insurance Company of Florida.................. FL
PPI PESCO Plus, Inc......................................................... DE
RMST HSA Residential Mortgage Services of Texas, Inc......................... DE
SRHP SR/HP/CM Corporation ................................................... TX
TAG Life Templeton American General Life of Bermuda, Ltd. ....................... BA
TI Thrift, Incorporated ................................................... IN
UAS American General Bancassurance Services, Inc............................ IL
UC USLIFE Corporation...................................................... DE
UCLA USLIFE Credit Life Insurance Company of Arizona ........................ AZ
URC USLIFE Realty Corporation............................................... TX
USC USLIFE Systems Corporation.............................................. DE
USL The United States Life Insurance Company in the City of
New York................................................................ NY
USMRP USMRP, Ltd.............................................................. T&C
VALIC The Variable Annuity Life Insurance Company ............................ TX
VAMCO The Variable Annuity Marketing Company ................................. TX
VRSCO VALIC Retirement Services Company....................................... TX
</TABLE>
C-9
<PAGE> 129
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
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> 130
ITEM 27. NUMBER OF CONTRACT OWNERS
As of January 31, 2000, there were 413 Non-Qualified Contract Owners and
128 Qualified Owners.
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> 131
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> 132
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> 133
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 meets
the requirements of Securities Act Rule 485(b) for effectiveness of this
Registration Statement, has duly caused this amendment to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Houston, State of Texas, on this 14th
day of April, 2000.
A.G. SEPARATE ACCOUNT A
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
Attest: /s/ Mary L. Cavanaugh By: /s/ John A. Graf
---------------------------- --------------------------
Mary L. Cavanaugh John A. Graf
Senior Vice President, General Counsel Chairman, Chief Executive
and Secretary Officer and President
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Depositor, American General Annuity Insurance Company,
certifies that it meets the requirements of Securities Act Rule 485(b) for
effectiveness of this Registration Statement, and has duly caused this amendment
to be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Houston, State of
Texas, on this 14th day of April, 2000.
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
Attest: /s/ Mary L. Cavanaugh By: /s/ John A. Graf
------------------------------------ --------------------------
Mary L. Cavanaugh John A. Graf
Senior Vice President, General Counsel Chairman, Chief Executive
and Secretary Officer and President
<PAGE> 134
Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John A. Graf Chairman, Chief Executive April 14, 2000
- -------------------------------- Officer and President
John A. Graf
/s/ Kent E. Barrett Director, Executive Vice President April 14, 2000
- -------------------------------- and Chief Financial Officer and
Kent E. Barrett Principal Accounting Officer
* Director and Executive Vice President - April 14, 2000
- -------------------------------- Sales
Bruce R. Abrams
* Director and Executive Vice President - April 14, 2000
- -------------------------------- Operations
Carl J. Santillo
Director
- --------------------------------
Robert M. Devlin
* Director and Executive Vice President - April 14, 2000
- -------------------------------- Institutional Marketing
Robert P. Condon
* Director and Senior Vice President - April 14, 2000
- -------------------------------- Human Resources
Rebecca G. Campbell
</TABLE>
*By: /s/ Mary L. Cavanaugh
----------------------
Mary L. Cavanaugh
Attorney-in-Fact
<PAGE> 135
INDEX TO EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM N-4
FOR
A.G. SEPARATE ACCOUNT A
OF
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
8(ii)(B) -- Form of Amendment to Fund Participation Agreement
between American General Annuity Insurance Company, One Group
Investment Trust, Banc One Investment Advisors Corporation and
One Group Administrative Services, Inc. dated as of
January 1, 2000.
8(iii)(B) -- Form of Administrative Services Agreement between American
General Annuity Insurance Company and Van Kampen Asset
Management Inc.
8(v)(B) -- Form of Administrative Services Agreement between American
General Annuity Insurance Company and A I M Advisors, Inc.
8(vi)(B) -- Form of Administrative Services Agreement between American
General Annuity Insurance Company and Oppenheimer Funds, Inc.
8(xii) -- Form of Redacted Participation Agreement between Franklin
Templeton Variable Insurance Products Trust, Franklin
Templeton Distributors, Inc. and American General Annuity
Insurance Company dated May 1, 2000.
8(xiii) -- Form of Redacted Administrative Services Agreement between
American General Annuity Insurance Company and Franklin
Templeton Services, Inc.
10 -- Consent of Independent Auditors.
15 -- Copies of manually signed Powers of Attorney for American
General Annuity Insurance Company Directors Kent E. Barrett,
Carl J. Santillo, Robert P. Condon, Rebecca G. Campbell, Bruce
R. Abrams and John A. Graf.
</TABLE>
<PAGE> 1
EXHIBIT 8(ii)(B)
AMENDMENT TO FUND PARTICIPATION AGREEMENT
This Amendment to the Fund Participation Agreement is made effective as
of January 1, 2000 among American General Annuity Insurance Company (the
"Company"), One Group(R) Investment Trust (the "Trust"), Banc One Investment
Advisors Corporation (the "Adviser"), and One Group Administrative Services,
Inc., a Delaware corporation (the "Services Company").
BACKGROUND INFORMATION
1. The Trust, the Company, Nationwide Advisory Services, Inc., Nationwide
Investors Services, Inc. ("Nationwide Investors"), and the Adviser entered
into a Fund Participation Agreement effective as of August 2, 1999 (the
"Participation Agreement") in order to permit the Company to utilize the
Trust as an investment vehicle for certain variable insurance products;
2. Effective January 1, 2000, Nationwide Advisory Services, Inc. and
Nationwide Investors will no longer serve as administrator and transfer
agent, respectively to the Trust; and
3. In order to reflect the replacement of Nationwide Advisory Services, Inc.
and Nationwide Investors and the appointment of the Services Company as
administrator, the parties wish to amend the Participation Agreement.
STATEMENT OF AGREEMENT
The parties hereby acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
Section 1. Definition of Terms. Unless otherwise defined herein, all
capitalized terms shall have the meaning ascribed to them in the Participation
Agreement.
Section 2. Amendment to reflect the appointment of the Services Company
as Administrator. In order to reflect the replacement of Nationwide Advisory
Services, Inc. as administrator by the Services Company, all references to
"Nationwide Advisory Services, Inc." in the Participation Agreement are hereby
changed to "One Group Administrative Services, Inc." By execution of this
Amendment, the Services Company agrees to be bound by and perform the duties and
obligations specified for the Administrator in the Participation Agreement
effective January 1, 2000. Notwithstanding the foregoing, the Services Company
shall not be liable for losses, claims, damages, liabilities or litigation
arising from the acts or omissions of Nationwide Advisory Services, Inc.
Section 3. Amendment to reflect the replacement of Nationwide
Investors. In order to reflect that Nationwide Investors no longer provides
transfer agency services to the Trust, all references to "Nationwide Investors
Services, Inc." and "Transfer Agent" shall be deleted from the Participation
Agreement, including, without limitation, Section 9.5 of the Participation
Agreement.
1
<PAGE> 2
Section 4. Conforming Amendments to Sections 2.1 and 2.3. Sections 2.1
and 2.3 of the Participation Agreement are hereby deleted in their entirety and
the following new Sections 2.1 and 2.3 are substituted in their place:
"2.1 The Trust agrees to make available for purchase by the
Company shares of the Portfolios and shall execute orders
placed for each Account on a daily basis at the net asset
value next computed after receipt by the Trust or its designee
of such order. For purposes of this Section 2.1, the Company
shall be the designee of the Trust for receipt of such orders
from the Account and receipt by such designee shall constitute
receipt by the Trust; provided that the Trust's designated
transfer agent receives notice of such order by 10:00 a.m.
Eastern Time on the next following Business Day ("Trade Date
plus 1"). Notwithstanding the foregoing, the Company shall use
its best efforts to provide the Trust's designated transfer
agent with notice of such orders by 9:30 a.m. Eastern Time on
Trade Date plus 1. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which
the Trust calculates its net asset value pursuant to the rules
of the Securities and Exchange Commission, as set forth in the
Trust's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the
Trust (hereinafter the "Board") may refuse to permit the Trust
to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting
in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best
interests of the shareholders of such Portfolio.
2.3 The Trust agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Trust held by
the Company, executing such requests on a daily basis at the
net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of
this Section 2.3, the Company shall be the designee of the
Trust for receipt of requests for redemption from each Account
and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust's designated transfer agent
receives notice of such request for redemption on Trade Date
plus 1 in accordance with the timing rules described in
Section 2.1."
Section 5. Notices. Article 12 is hereby amended by replacing the
address for the Trust, the Administrator, and the Adviser with the following:
If to the Trust:
One Group Investment Trust
1111 Polaris Parkway, Suite B2
Columbus, Ohio 43240
Attn: Fund President
If to the Administrator:
One Group Administrative Services, Inc.
1111 Polaris Parkway, Suite B2
Columbus, Ohio 43240
Attention: President
2
<PAGE> 3
If to the Adviser:
Banc One Investment Advisors Corporation
1111 Polaris Parkway, Suite B2
Columbus, Ohio 43240
Attention: Peter W. Atwater
Section 6. Miscellaneous. Except as otherwise set forth herein, the
Participation Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment effective as of January 1, 2000.
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
By: /s/ Bruce R. Abrams
----------------------------
Its: EVP
ONE GROUP(R) INVESTMENT TRUST
By: /s/ Mark A. Beeson
----------------------------
Its: President
ONE GROUP ADMINISTRATIVE SERVICES, INC.
By: /s/ Robert L. Young
----------------------------
Its Vice President
BANC ONE INVESTMENT ADVISORS CORPORATION
By: /s/ Peter W. Atwater
----------------------------
Its: Chief Operating Officer
3
<PAGE> 1
EXHIBIT 8(iii)(B)
AGREEMENT
THIS AGREEMENT ("Agreement") made as of January 1, 2000, is by and between VAN
KAMPEN ASSET MANAGEMENT INC., a Delaware corporation ("Adviser") and AMERICAN
GENERAL ANNUITY INSURANCE COMPANY, a Texas corporation ("AGA").
W I T N E S S E T H:
WHEREAS, each of the investment companies listed on Schedule One hereto
("Schedule One," as the same may be amended from time to time), is registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Act") (such investment companies are hereinafter
collectively called the "Funds," or each a "Fund"); and
WHEREAS, each of the Funds is available as an investment vehicle for AGA for
certain of its separate accounts to fund variable life insurance policies and/or
variable annuity contracts identified on Schedule Two hereto ("Schedule Two," as
the same may be amended from time to time) (the "Contracts"); and
WHEREAS, AGA has entered into a participation agreement dated January 24, 1997,
among AGA, American General Securities Incorporated, Adviser, Van Kampen Funds
Inc. ("Underwriter"), and the Funds (the "Participation Agreement," as the same
may be amended from time to time); and
WHEREAS, Adviser provides, among other things, investment advisory and/or
administrative services to the Funds; and
WHEREAS, Adviser desires AGA to provide the administrative services specified in
the attached Exhibit A ("Administrative Services"), in connection with the
Contracts for the benefit of persons who maintain their ownership interests in
the separate account, whose interests are included in the master account
("Master Account") referred to in paragraph 1 of Exhibit A ("Shareholders"), and
AGA is willing and able to provide such Administrative Services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, each party hereto severally agrees as follows:
1. AGA agrees to perform the Administrative Services specified in Exhibit
A hereto for the benefit of the Shareholders.
2. AGA represents and agrees that it will maintain and preserve all
records as required by law to be maintained and preserved in connection
with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the Administrative
Services.
1
<PAGE> 2
3. AGA agrees to provide copies of all the historical records relating to
transactions between the Funds and Shareholders, and all written
communications and other related materials regarding the Fund(s) to or
from such Shareholders, as reasonably requested by Adviser or its
representatives (which representatives, include, without limitation,
its auditors, legal counsel or the Underwriter, as the case may be), to
enable Adviser or its representatives to monitor and review the
Administrative Services performed by AGA, or comply with any request of
the board of directors, or trustees or general partners (collectively,
the "Directors") of any Fund, or of a governmental body,
self-regulatory organization or Shareholder.
In addition, AGA agrees that it will permit Adviser, the Funds or their
representatives, to have reasonable access to its personnel and records
in order to facilitate the monitoring of the quality of the
Administrative Services.
4. AGA may, with the consent of Adviser, contract with or establish
relationships with other parties for the provision of the
Administrative Services or other activities of AGA required by this
Agreement, or the Participation Agreement, provided that AGA shall be
fully responsible for the acts and omissions of such other parties.
5. AGA hereby agrees to notify Adviser promptly if for any reason it is
unable to perform fully and promptly any of its obligations under this
Agreement.
6. AGA hereby represents and covenants that it does not, and will not, own
or hold or control with power to vote any shares of the Funds which are
registered in the name of AGA or the name of its nominee and which are
maintained in AGA variable annuity or variable life insurance accounts.
AGA represents further that it is not registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended (the"1934 Act"),
and it is not required to be so registered, including as a result of
entering into this Agreement and performing the Administrative
Services, and other obligations of AGA set forth in this Agreement.
7. The provisions of the Agreement shall in no way limit the authority of
Adviser, or any Fund or Underwriter to take such action as any of such
parties may deem appropriate or advisable in connection with all
matters relating to the operations of any of such Funds and/or sale of
its shares.
8. In consideration of the performance of the Administrative Services by
AGA with respect to the Contracts, beginning on the date hereof and
during the term of the Participation Agreement, Adviser agrees to pay
AGA an annual fee which shall equal .25% of the value of each Fund's
assets in the Contracts maintained in the Master Account for the
Shareholders (excluding all assets invested during the guarantee
periods available under the Contracts). The determination of applicable
assets shall be made by averaging assets in applicable Funds as of the
last Valuation Date (as defined in the prospectus relating to the
Contracts) of each month falling within the applicable calendar year.
The foregoing fee will be paid by Adviser to AGA on a calendar year
basis, and in this regard, payment
2
<PAGE> 3
of such fee will be made by Adviser to AGA within thirty (30) days
following the end of each calendar year.
Notwithstanding anything in this Agreement or the Participation
Agreement appearing to the contrary, the payments by Adviser to AGA
relate solely to the performance by AGA of the Administrative Services
described herein only, and do not constitute payment in any manner for
services provided by AGA to AGA policy or contract owners, or to any
separate account organized by AGA, or for any investment advisory
services, or for costs associated with the distribution of any variable
annuity or variable life insurance contracts.
9. AGA shall indemnify and hold harmless each of the Funds, Adviser and
Underwriter and each of their respective officers, Directors, employees
and agents from and against any and all losses, claims, damages,
expenses, or liabilities that any one or more of them may incur
including without limitation reasonable attorneys' fees, expenses and
costs arising out of or related to the performance or non-performance
by AGA of the Administrative Services under this Agreement.
10 This Agreement may be terminated without penalty at any time by AGA or
by Adviser as to one or more of the Funds collectively, upon one
hundred and eighty days (180) written notice to the other party.
Notwithstanding the foregoing, the provisions of paragraphs 2, 3, 9 and
11 of this Agreement, shall continue in full force and effect after
termination of this Agreement.
This Agreement shall not require AGA to preserve any records (in any
medium or format) relating to this Agreement beyond the time periods
otherwise required by the laws to which AGA or the Funds are subject
provided that such records shall be offered to the Funds in the event
AGA decides to no longer preserve such records following such time
periods.
11. After the date of any termination of this Agreement in accordance with
paragraph 10 of this Agreement, no fee will be due with respect to any
amounts in the Contracts first placed in the Master Account for the
benefit of Shareholders after the date of such termination. However,
notwithstanding any such termination, Adviser will remain obligated to
pay AGA the fee specified in paragraph 8 of this Agreement, with
respect to the value of each Fund's average daily net assets maintained
in the Master Account with respect to the Contracts as of the date of
such termination, for so long as such amounts are held in the Master
Account and AGA continues to provide the Administrative Services with
respect to such amounts in conformity with this Agreement. This
Agreement, or any provision hereof, shall survive termination to the
extent necessary for each party to perform its obligations with respect
to amounts for which a fee continues to be due subsequent to such
termination.
12. AGA understands and agrees that the obligations of Adviser under this
Agreement are not binding upon any of the Funds, upon any of their
Board members or upon any shareholder of any of the Funds.
13. It is understood and agreed that in performing the services under this
Agreement AGA, acting in its capacity described herein, shall at no
time be acting as an agent for Adviser, Underwriter or any of the
Funds. AGA agrees, and agrees to cause its agents, not to make any
representations concerning a Fund except those contained in the Fund's
then-current
3
<PAGE> 4
prospectus; in current sales literature furnished by the Fund, Adviser
or Underwriter to AGA; in the then current prospectus for a variable
annuity contract or variable life insurance policy issued by AGA or
then current sales literature with respect to such variable annuity
contract or variable life insurance policy, approved by Adviser.
14. This Agreement, including the provisions set forth herein in paragraph
8, may only be amended pursuant to a written instrument signed by the
party to be charged. This Agreement may not be assigned by a party
hereto, by operation of law or otherwise, without the prior written
consent of the other party.
15. This Agreement shall be governed by the laws of the State of Illinois,
without giving effect to the principles of conflicts of law of such
jurisdiction.
16. This Agreement, including Exhibit A and Schedules One and Two,
constitutes the entire agreement between the parties with respect to
the matters dealt with herein and supersedes any previous agreements
and documents with respect to such matters. The parties agree that
Schedules One and Two may be replaced from time to time with new
Schedule One and Two, as appropriate to accurately reflect any changes
in the Funds available as investment vehicles under the Participation
Agreement.
4
<PAGE> 5
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
By:
----------------------------------
Authorized Signatory
--------------------------------
Print or Type Name
VAN KAMPEN ASSET MANAGEMENT INC.
By:
----------------------------------
Authorized Signatory
--------------------------------
Print or Type Name
5
<PAGE> 6
SCHEDULE ONE
<TABLE>
<CAPTION>
INVESTMENT COMPANY NAME: FUND NAME(S):
- ------------------------ -------------
<S> <C>
Van Kampen Life Investment Trust Enterprise Portfolio
Emerging Growth Portfolio
</TABLE>
6
<PAGE> 7
SCHEDULE TWO
LIST OF CONTRACTS
1. ElitePlus Bonus Variable Annuity
2. The One Multi-Manager Annuity
7
<PAGE> 8
EXHIBIT A
Pursuant to the Agreement by and among the parties hereto, AGA shall perform the
following Administrative Services:
1. Maintain separate records for each Shareholder, which records shall reflect
shares purchased and redeemed for the benefit of the Shareholder and share
balances held for the benefit of the Shareholder. AGA shall maintain the
Master Account with the transfer agent of the Fund on behalf of
Shareholders and such Master Account shall be in the name of AGA or its
nominee as the record owner of the shares held for such Shareholders.
2. For each Fund, disburse or credit to Shareholders all proceeds of
redemptions of shares of the Fund and all dividends and other distributions
not reinvested in shares of the Fund or paid to the Separate Account
holding the Shareholders' interests.
3. Prepare and transmit to Shareholders periodic account statements showing
the total number of shares held for the benefit of the Shareholder as of
the statement closing date (converted to interests in the Separate
Account), purchases and redemptions of Fund shares for the benefit of the
Shareholder during the period covered by the statement, and the dividends
and other distributions paid for the benefit of the Shareholder during the
statement period (whether paid in cash or reinvested in Fund shares).
4. Transmit to Shareholders proxy materials and reports and other information
received by AGA from any of the Funds and required to be sent to
Shareholders under the federal securities laws and, upon request of the
Fund's transfer agent, transmit to Shareholders material Fund
communications deemed by the Fund, through its Board of Directors or other
similar governing body, to be necessary and proper for receipt by all Fund
beneficial shareholders.
5. Transmit to the Fund's transfer agent purchase and redemption orders on
behalf of Shareholders.
1. Provide to the Funds, or to the transfer agent for any of the Funds, or any
of the agents designated by any of them, such periodic reports as shall
reasonably be concluded to be necessary to enable each of the Funds and its
Underwriter to comply with any applicable State Blue Sky requirements.
<PAGE> 1
EXHIBIT 8(v)(B)
ADMINISTRATIVE SERVICES AGREEMENT
American General Annuity Insurance Company ("INSURER") and A I M
ADVISORS, INC. ("AIM") (collectively, the "Parties") mutually agree to the
arrangements set forth in this Administrative Services Agreement (the
"Agreement") dated as of November 23, 1998.
WHEREAS, AIM is the investment adviser to AIM Variable Insurance Funds,
Inc. (the "Fund"); and
WHEREAS, AIM has entered into an amended Master Administrative Services
Agreement, dated May 1, 1998, with the Fund ("Master Agreement") pursuant to
which it has agreed to provide, or arrange to provide, certain administrative
services, including such services as may be requested by the Fund's Board of
Directors from time to time; and
WHEREAS, INSURER issues variable life insurance policies and/or variable
annuity contracts (collectively, the "Contracts"); and
WHEREAS, INSURER has entered into a participation agreement, dated
November 23, 1998 ("Participation Agreement") with the Fund, pursuant to which
the Fund has agreed to make shares of certain of its portfolios ("Portfolios")
available for purchase by one or more of INSURER's separate accounts or
divisions thereof (each, a "Separate Account"), in connection with the
allocation by Contract owners of purchase payments to corresponding investment
options offered under the Contracts; and
WHEREAS, INSURER and AIM expect that the Fund, and its Portfolios, can
derive substantial savings in administrative expenses by virtue of having one or
more Separate Accounts of INSURER each as a single shareholder of record of
Portfolio shares, rather than having numerous public shareholders of such
shares; and
WHEREAS, INSURER and AIM expect that the Fund, and its Portfolios, can
derive such substantial savings because INSURER performs the administrative
services listed on Schedule A hereto for the Fund in connection with the
Contracts issued by INSURER; and
WHEREAS, INSURER has no contractual or other legal obligation to perform
such administrative services, other than pursuant to this Agreement and the
Participation Agreement; and
WHEREAS, INSURER desires to be compensated for providing such
administrative services; and
<PAGE> 2
WHEREAS, AIM desires that the Fund benefit from the lower administrative
expenses resulting from the administrative services performed by INSURER; and
WHEREAS, AIM desires to retain the administrative services of INSURER
and to compensate INSURER for providing such administrative services;
NOW, THEREFORE, the Parties agree as follows:
SECTION 1. ADMINISTRATIVE SERVICES; PAYMENTS THEREFOR.
(a) INSURER shall provide the administrative services set out in
Schedule A hereto and made a part hereof, as the same may be amended from time
to time. For such services, AIM agrees to pay to INSURER a quarterly fee
("Quarterly Fee") equal to a percentage of the average daily net assets of the
Fund attributable to the Contracts issued by INSURER ("INSURER Fund Assets") at
the following annual rates:
<TABLE>
<CAPTION>
ANNUAL RATE TOTAL AVERAGE QUARTERLY NET ASSETS FOR ALL PORTFOLIOS
----------- -----------------------------------------------------
<S> <C>
</TABLE>
(b) AIM shall calculate the Quarterly Fee at the end of each calendar
quarter and will make such payment to INSURER, without demand or notice by
INSURER, within 30 days thereafter, in a manner mutually agreed upon by the
Parties from time to time.
(c) From time to time, the Parties shall review the Quarterly Fee to
determine whether it exceeds or is reasonably expected to exceed the incurred
and anticipated costs, over time, of INSURER. The Parties agree to negotiate in
good faith a reduction to the Quarterly Fee as necessary to eliminate any such
excess or as necessary to reflect a reduction in the fee paid by the Fund to AIM
pursuant to the Master Agreement.
SECTION 2. NATURE OF PAYMENTS.
The Parties to this Agreement recognize and agree that AIM's payments
hereunder are for administrative services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution of
Contracts or of Portfolio shares, and are not otherwise related to investment
advisory or distribution services or expenses. INSURER represents and warrants
that the fees to be paid by AIM for services to be rendered by INSURER pursuant
to the terms of this Agreement are to compensate the INSURER for providing
administrative services to the Fund, and are not designed to reimburse or
compensate INSURER for providing administrative services with respect to the
Contracts or any Separate Account.
SECTION 3. TERM AND TERMINATION.
Any Party may terminate this Agreement, without penalty, on 60 days
written notice to the
2
<PAGE> 3
other Party. Unless so terminated, this Agreement shall continue in effect for
so long as AIM or its successor(s) in interest, or any affiliate thereof,
continues to perform in a similar capacity for the Fund, and for so long as
INSURER provides the services contemplated hereunder with respect to Contracts
under which values or monies are allocated to a Portfolio.
SECTION 4. AMENDMENT.
This Agreement may be amended upon mutual agreement of the Parties in
writing.
SECTION 5. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
2929 Allen Parkway
Houston, Texas 77019
Facsimile: (713) 831-5931
Attention: Nori L. Gabert, Esq.
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attention: Nancy L. Martin, Esq.
SECTION 6. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall be binding upon the
Parties and their transferees, successors and assigns. The benefits of and the
right to enforce this Agreement shall accrue to the Parties and their
transferees, successors and assigns.
(b) Assignment. Neither this Agreement nor any of the rights,
obligations or liabilities of any Party hereto shall be assigned without the
written consent of the other Party.
(c) Intended Beneficiaries. Nothing in this Agreement shall be construed
to give any person or entity other than the Parties, as well as the Fund, any
legal or equitable claim, right or remedy. Rather, this Agreement is intended to
be for the sole and exclusive benefit of the Parties, as well as the Fund.
(d) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same instrument.
3
<PAGE> 4
(e) Applicable Law. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the State of Delaware without reference
to the conflict of law principles thereof.
(f) Severability. If any portion of this Agreement shall be found to be
invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date of first above written.
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
By:
--------------------------------------
Title:
--------------------------------------
A I M ADVISORS, INC.
By:
--------------------------------------
Title:
--------------------------------------
4
<PAGE> 5
SCHEDULE A
ADMINISTRATIVE SERVICES FOR
AIM VARIABLE INSURANCE FUNDS, INC.
INSURER shall provide certain administrative services respecting the
operations of the Fund, as set forth below. This Schedule, which may be amended
from time to time as mutually agreed upon by INSURER and AIM, constitutes an
integral part of the Agreement to which it is attached. Capitalized terms used
herein shall, unless otherwise noted, have the same meaning as the defined terms
in the Agreement to which this Schedule relates.
A. RECORDS OF PORTFOLIO SHARE TRANSACTIONS; MISCELLANEOUS RECORDS
1. INSURER shall maintain master accounts with the Fund, on behalf of
each Portfolio, which accounts shall bear the name of INSURER as the record
owner of Portfolio shares on behalf of each Separate Account investing in the
Portfolio.
2. INSURER shall maintain a daily journal setting out the number of
shares of each Portfolio purchased, redeemed or exchanged by Contract owners
each day, as well as the net purchase or redemption orders for Portfolio shares
submitted each day, to assist AIM, the Fund and/or the Fund's transfer agent in
tracking and recording Portfolio share transactions, and to facilitate the
computation of each Portfolio's net asset value per share. INSURER shall
promptly provide AIM, the Fund, and the Fund's transfer agent with a copy of
such journal entries or information appearing thereon in such format as may be
reasonably requested from time to time. INSURER shall provide such other
assistance to AIM, the Fund, and the Fund's transfer agent as may be necessary
to cause various Portfolio share transactions effected by Contract owners to be
properly reflected on the books and records of the Fund.
3. In addition to the foregoing records, and without limitation, INSURER
shall maintain and preserve all records as required by law to be maintained and
preserved in connection with providing administrative services hereunder.
B. ORDER PLACEMENT AND PAYMENT
1. INSURER shall determine the net amount to be transmitted to the
Separate Accounts as a result of redemptions of each Portfolio's shares based on
Contract owner redemption requests and shall disburse or credit to the Separate
Accounts all proceeds of redemptions of Portfolio shares. INSURER shall notify
the Fund of the cash required to meet redemption payments.
2. INSURER shall determine the net amount to be transmitted to the Fund
as a result of purchases of Portfolio shares based on Contract owner purchase
payments and transfers allocated to the Separate Accounts investing in each
Portfolio. INSURER shall transmit net purchase payments to the Fund's custodian.
5
<PAGE> 6
C. ACCOUNTING SERVICES
INSURER shall perform miscellaneous accounting services as may be
reasonably requested from time to time by AIM, which services shall relate to
the business contemplated by the Participation Agreement between INSURER and the
Fund, as amended from time to time. Such services shall include, without
limitation, periodic reconciliation and balancing of INSURER's books and records
with those of the Fund with respect to such matters as cash accounts, Portfolio
share purchase and redemption orders placed with the Fund, dividend and
distribution payments by the Fund, and such other accounting matters that may
arise from time to time in connection with the operations of the Fund as related
to the business contemplated by the Participation Agreement.
D. REPORTS
INSURER acknowledges that AIM may, from time to time, be called upon by
the Fund's Board of Directors ("Board"), to provide various types of information
pertaining to the operations of the Fund and related matters, and that AIM also
may, from time to time, decide to provide such information to the Board in its
own discretion. Accordingly, INSURER agrees to provide AIM with such assistance
as AIM may reasonably request so that AIM can report such information to the
Fund's Board in a timely manner. INSURER acknowledges that such information and
assistance shall be in addition to the information and assistance required of
INSURER pursuant to the Fund's mixed and shared funding SEC exemptive order,
described in the Participation Agreement.
INSURER further agrees to provide AIM with such assistance as AIM may
reasonably request with respect to the preparation and submission of reports and
other documents pertaining to the Fund to appropriate regulatory bodies and
third party reporting services.
E. FUND-RELATED CONTRACT OWNER SERVICES
INSURER agrees to print and distribute, in a timely manner, prospectuses,
statements of additional information, supplements thereto, periodic reports,
proxy materials and any other materials of the Fund required by law or otherwise
to be given to its shareholders, including, without limitation, Contract owners
investing in Portfolio shares. INSURER further agrees to provide telephonic
support for Contract owners, including, without limitation, advice with respect
to inquiries about the Fund and each Portfolio thereof (not including
information about performance or related to sales), communicating with Contract
owners about Fund (and Separate Account) performance, and assisting with proxy
solicitations, specifically with respect to soliciting voting instructions from
Contract owners.
F. MISCELLANEOUS SERVICES
INSURER shall provide such other administrative support to the Fund as mutually
agreed between INSURER and AIM or the Fund from time to time. INSURER shall,
from time to time, relieve the Fund of other usual or incidental administration
services of the type ordinarily borne by mutual funds that offer shares to
individual members of the general public.
6
<PAGE> 1
EXHIBIT 8(vi)(B)
__________, 1999
XXXXX
XXXXX
American General Annuity Insurance Company
2929 Allen Parkway
Houston, TX 77019
Dear XXXX:
The following constitutes a letter of understanding (the "Agreement")
whereby OppenheimerFunds, Inc. ("OFI") intends to compensate American General
Annuity Insurance Company ("American General") for providing the administrative
support services described in Schedule A hereto, which is made a part hereof, to
contract owners of any American General variable annuity and/or variable life
insurance product described in Schedule C hereto, which is made a part hereof
("American General Products") that are indirect shareholders of Oppenheimer
Variable Account Funds ("OVAF"), a series investment company dedicated to
insurance company separate accounts for which OFI acts as investment manager.
This Agreement will be effective as of December 1, 1999. All other
terms and conditions of this Agreement are described in Schedule C hereto, which
is made a part hereof.
We look forward to a long and prosperous relationship. If this Agreement
meets with your approval, please have the enclosed duplicate copy of this letter
signed on behalf of American General, and return it to my attention.
Sincerely,
Michael F.X. Keogh
Title: Vice President,
OppenheimerFunds, Inc.
Agreed to and accepted on behalf of
American General Life Insurance Company
By:
-------------------------------------
Title:
-----------------------------------
<PAGE> 2
SCHEDULE A TO
DECEMBER 1, 1999 LETTER AGREEMENT
BY AND BETWEEN
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
AND
OPPENHEIMERFUNDS, INC. (THE "AGREEMENT")
Maintenance of Books and Records
Assist as necessary to maintain book entry records on behalf of the
Funds regarding issuance to, transfer within (via net purchase orders)
and redemption by the Accounts of Fund shares. Maintain general ledgers
regarding the Accounts' holdings of Fund shares, coordinate and
reconcile information, and coordinate maintenance of ledgers by
financial institutions and other contract owner service providers.
Communication with the Funds
Serve as the designee of the Funds for receipt of purchase and
redemption orders from the Account and to transmit such orders, and
payment therefor, to the Funds. Coordinate with the Funds' agents
respecting daily valuation of the Funds' shares and the Accounts'
units.
Purchase Orders
-- Determine net amount available for investment in the Funds.
-- Deposit receipts at the Funds or the Funds' custodian
(generally by wire transfer).
-- Notify the Funds of the estimated amount required to pay
dividend or distribution.
Redemption Orders
-- Determine net amount required for redemption by the Funds.
Notify the custodian and Funds of cash required to meet
payments.
Purchase and redeem shares of the Funds on behalf of the Accounts at
the then current price in accordance with the terms of each Fund's then
current prospectus.
Assistance in enforcing procedures adopted on behalf of the
Trust to reduce, discourage, or eliminate market timing
transactions in a Fund's shares in order to reduce or
eliminate adverse effects on the Fund or its shareholders.
Processing Distributions from the Funds
Process ordinary dividends and capital gains.
Reinvest the Funds' distributions.
Reports
Periodic information reporting to the Funds, including, but not limited
to, furnishing registration statements, prospectuses, statements of
additional information, reports, solicitations for voting instructions,
and any other SEC filings with respect to the Accounts invested in the
Funds, as not otherwise provided for.
Periodic information reporting about the Funds, including any necessary
delivery of the Funds' prospectus and annual and semi-annual reports to
contract owners, as not otherwise provided for.
<PAGE> 3
Fund-related Contract Owner Services
Maintain adequate fidelity bond or similar coverage for all Company
officers, employees, investment advisors and other individuals or
entities controlled by the Company who deal with the money and/or
securities of the Funds.
Provide general information with respect to Fund inquiries (not
including information about performance or related to sales). Provide
information regarding performance of the Funds and the subaccounts of
the Accounts to existing contract owners.
Oversee and assist the solicitation, counting and voting or contract
owner voting interests in the Funds pursuant to Fund proxy statements.
Other Administrative Support
Provide other administrative and legal compliance support for the Funds
as mutually agreed upon by the Company and the Funds or the Fund
Administrator. Relieve the Funds of other usual or incidental
administrative services provided to individual contract owners.
<PAGE> 4
SCHEDULE B TO
DECEMBER 1, 1999 LETTER AGREEMENT
BY AND BETWEEN
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
AND
OPPENHEIMERFUNDS, INC. (THE "AGREEMENT")
<TABLE>
<CAPTION>
Separate Accounts Products
- ----------------- --------
<S> <C>
</TABLE>
<PAGE> 5
SCHEDULE C TO
DECEMBER 1, 1999 LETTER AGREEMENT
BY AND BETWEEN
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
AND
OPPENHEIMERFUNDS, INC. (THE "AGREEMENT")
1. The Agreement may be cancelled by any party upon ten days of written
notice: (1) if the participation agreement for American General Products between
OFI, American General and OVAF is terminated; (2) if neither American General
nor any underwriter under its control actively promotes American General
Products with OVAF as underlying options to new investors; (3) if either party
is subject to a change of control; or (4) if it is not permissible to continue
this Agreement under laws, rules or regulations applicable to OVAF, OFI or
American General. Either party may also cancel this Agreement upon six months
written notice.
2. Payment will be made to American General quarterly during the term
this Agreement is in effect, no later than thirty days after the end of the
quarter starting with the quarter ending December 31, 1999. Payments shall be
separately computed on the average net assets of OVAF held by American General
Products variable account during the prior quarter, subject to a limit of
one-third of the average management fee paid by that OVAF series to OFI during
the prior quarter, subject to a limit of one-third of the average management fee
paid by that series to OFI during the prior quarter, at the annual rate of:.
For purposes of determining whether the breakpoint described in the preceding
sentence has been achieved, the net asset value of OVAF shares held by separate
accounts of American General Life Insurance Company will be aggregated with
shares held by American General.
3. Except to the extent that American General's, OFI's or OVAF's
counsel may deem it necessary or advisable to disclose in their respective
prospectuses or elsewhere, the terms of this Agreement will be held confidential
by each party. The party making such disclosure shall provide advance written
notification, including particulars, to the other party that it is making such
disclosure.
4. No other fees or expenses will be required of OFI or OVAF for the
sponsorship within American General product line, except as mutually agreed to
by the parties.
5. On advance written notice, OFI or a subsidiary may pay all or a
portion of the fees provided for in this Agreement under any service fee or Rule
12b-1 plan hereafter adopted by OVAF, which shall satisfy that portion of OFI's
payment obligation hereunder.
6. OFI will be responsible for calculating the fees payable hereunder.
<PAGE> 6
7. Each party shall provide each other party or its designated agent
reasonable access to its records to permit it to audit or review the accuracy of
the charges submitted for payment under this Agreement.
8. This Agreement does not modify or replace the November 23, 1998
Agreement by and between American General Annuity Insurance Company and OFI (the
"1998 Agreement"), or any other agreement with American General Life Insurance
Company pertaining to any Oppenheimer fund other than OVAF. The parties hereto
agree that OVAF assets that qualify for payment under the 1998 Agreement shall
not qualify for payment under this Agreement.
<PAGE> 1
EXHIBIT 8(xii)
PARTICIPATION AGREEMENT
as of May 1, 2000
Franklin Templeton Variable Insurance Products Trust
Franklin Templeton Distributors, Inc.
American General Annuity Insurance Company
CONTENTS
<TABLE>
<CAPTION>
Paragraph Subject Matter
--------- --------------
<S> <C>
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
SCHEDULES TO THIS AGREEMENT
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust; Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. [REDACTED]
G. Addresses for Notices
H. Shared Funding Order
</TABLE>
1. PARTIES AND PURPOSE
This agreement (the "Agreement") is between Franklin Templeton Variable
Insurance Products Trust, an open-end management investment company organized as
a business trust under Massachusetts law (the "Trust"), Franklin Templeton
Distributors, Inc., a California corporation which is the principal underwriter
for the Trust (the "Underwriter," and together with the Trust, "we" or "us") and
the insurance company identified on Schedule a ("you"), on your own behalf and
on behalf of each segregated asset account maintained by you that is listed on
Schedule B, as that schedule may be amended from time to time ("Account" or
"Accounts").
<PAGE> 2
[REDACTED]
2. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES BY YOU
You represent and warrant that:
1. You are an insurance company duly organized and in good
standing under the laws of your state of incorporation.
2. All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust, in an amount not less than $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
3. Each Account is a duly organized, validly existing
segregated asset account under applicable insurance law and interests in each
Account are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Internal Revenue Code of 1986, as amended ("Code") and the regulations
thereunder. You will use your best efforts to continue to meet such definitional
requirements, and will notify us immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future.
4. Each Account either: (i) has been registered or, prior to
any issuance or sale of the Contracts, will be registered as a unit investment
trust under the Investment Company Act of 1940 ("1940 Act"); or (ii) has not
been so registered in proper reliance upon an exemption from registration under
Section 3(c) of the 1940 Act; if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, you will make every
effort to maintain such exemption and will notify us immediately upon having a
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
5. The Contracts or interests in the Accounts: (i) are or,
prior to any issuance or sale will be, registered as securities under the
Securities Act of 1933, as amended (the "1933 Act"); or (ii) are not registered
because they are properly exempt from registration under Section 3(a)(2) of the
1933 Act or will be offered exclusively in transactions that are properly exempt
from registration under Section 4(2) or Regulation D of the 1933 Act, in which
case you will make every effort to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
2
<PAGE> 3
6. The Contracts: (i) will be sold by broker-dealers, or their
registered representatives, who are registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
7. { }
8. The fees and charges deducted under each Contract, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
9. You will use shares of the Trust only for the purpose of
funding benefits of the Contracts through the Accounts.
10. Contracts will not be sold outside of the United States.
11. With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
a. the principal underwriter for each such
Account and any subaccounts thereof is a
registered broker-dealer with the SEC under
the 1934 Act;
b. the shares of the Portfolios of the Trust
are and will continue to be the only
investment securities held by the
corresponding subaccounts; and
c. with regard to each Portfolio, you, on
behalf of the corresponding subaccount;
will:
(i) vote such shares held by it in the
same proportion as the vote of all
other holders of such shares; and
(ii) refrain from substituting
shares of another security for such
shares unless the SEC has approved
such substitution in the manner
provided in Section 26 of the 1940
Act.
(b) REPRESENTATIONS AND WARRANTIES BY THE TRUST
The Trust represents and warrants that:
1. It is duly organized and in good standing under the laws of
the State of Massachusetts.
3
<PAGE> 4
2. All of its directors, officers, employees and others
dealing with the money and/or securities of a Portfolio are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust in an amount not less that the minimum coverage required by Rule 17g-1
or other regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3. It is registered as an open-end management investment
company under the 1940 Act.
4. Each class of shares of the Portfolios of the Trust is
registered under the 1933 Act.
5. It will amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares.
6. It will comply, in all material respects, with the 1933 and
1940 Acts and the rules and regulations thereunder.
7. It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to maintain
such qualification, and will notify you immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
8. The investments of each Portfolio will comply with the
diversification requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5. Upon
having a reasonable basis for believing any Portfolio has ceased to comply and
will not be able to comply within the grace period afforded by Regulation
1.817-5, the Trust will notify you immediately and will take all reasonable
steps to adequately diversify the Portfolio to achieve compliance.
9. [ ]
(c) REPRESENTATIONS AND WARRANTIES BY THE UNDERWRITER
The Underwriter represents and warrants that:
1. It is registered as a broker dealer with the SEC under the
1934 Act, and is a member in good standing of the NASD.
2. Each investment adviser listed on Schedule C (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
(d) WARRANTY AND AGREEMENT BY BOTH YOU AND US
4
<PAGE> 5
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations thereunder to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
and qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges.
3. PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
(a) We will make shares of the Portfolios available to the Accounts for
the benefit of the Contracts. The shares will be available for purchase at the
net asset value per share next computed after we (or our agent) receive a
purchase order, as established in accordance with the provisions of the then
current prospectus of the Trust. Notwithstanding the foregoing, the Trust's
Board of Trustees ("Trustees") may refuse to sell shares of any Portfolio to any
person, or may suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or if, in the sole discretion of the Trustees, they deem such action to be in
the best interests of the shareholders of such Portfolio. Without limiting the
foregoing, the Trustees have determined that there is a significant risk that
the Trust and its shareholders may be adversely affected by investors whose
purchase and redemption activity follows a market timing pattern, and have
authorized the Trust, the Underwriter and the Trust's transfer agent to adopt
procedures and take other action (including, without limitation, rejecting
specific purchase orders) as they deem necessary to reduce, discourage or
eliminate market timing activity. You agree to cooperate with us to assist us in
implementing the Trust's restrictions on purchase and redemption activity that
follows a market timing pattern.
(b) We agree that shares of the Trust will be sold only to life
insurance companies which have entered into fund participation agreements with
the Trust ("Participating Insurance Companies") and their separate accounts or
to qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order. No shares of any Portfolio will be sold to the general
public.
(c) { }
(d) { }
(e) { }
(f) { }
5
<PAGE> 6
(g) We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent) of the request for redemption, as established
in accordance with the provisions of the then current prospectus of the Trust.
We shall make payment for such shares in the manner we establish from time to
time, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act. Payments for the purchase or redemption of shares by
you may be netted against one another on any Business Day for the purpose of
determining the amount of any wire transfer on that Business Day.
(h) Issuance and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the Accounts. Portfolio
shares purchased from the Trust will be recorded in the appropriate title for
each Account or the appropriate subaccount of each Account.
(i) We shall furnish, on or before the ex-dividend date, notice to you
of any income dividends or capital gain distributions payable on the shares of
any Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
4. FEES, EXPENSES, PROSPECTUSES, PROXY MATERIALS AND REPORTS
(a) { }
(b) We shall prepare and be responsible for filing with the SEC, and
any state regulators requiring such filing, all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
(c) We shall use reasonable efforts to provide you, on a timely basis,
with such information about the Trust, the Portfolios and each Adviser, in such
form as you may reasonably require, as you shall reasonably request in
connection with the preparation of disclosure documents and annual and
semi-annual reports pertaining to the Contracts.
(d) { }
(e) { }
(f) You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
5. VOTING
6
<PAGE> 7
(a) All Participating Insurance Companies shall have the obligations
and responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
(b) If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners; and (iii) vote Trust shares for
which no instructions have been received in the same proportion as Trust shares
of such Portfolio for which instructions have been received; so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. You reserve the
right to vote Trust shares held in any Account in your own right, to the extent
permitted by law.
(c) So long as, and to the extent that, the SEC interprets the 1940 Act
to require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. SALES MATERIAL, INFORMATION AND TRADEMARKS
(a) { }
(b) { }
(c) You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
(d) We shall not give any information or make any representations or
statements on behalf of you or concerning you, the Accounts or the Contracts
other than information or representations contained in and accurately derived
from disclosure documents for the Contracts (as such disclosure documents may be
amended or supplemented from time to time), or in materials approved by you for
distribution, including Sales literature or other Promotional materials, except
as required by legal process or regulatory authorities or with
7
<PAGE> 8
your written permission. We may use the names of you, the Accounts and the
Contracts in our sales literature and disclosure documents.
(e) Except as provided in Section 6(b), you shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Templeton" or any logo or other trademark relating to the Trust or the
Underwriter without prior written consent, and upon termination of this
Agreement for any reason, you shall cease all use of any such name or mark as
soon as reasonably practicable.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY YOU
1. You agree to indemnify and hold harmless the Underwriter,
the Trust and each of its Trustees, officers, employees and agents and each
person, if any, who controls the Trust within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Section 7) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with your
written consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of
shares of the Trust or the Contracts and
a. arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in a disclosure document for the Contracts or in the Contracts
themselves or in sales literature generated or approved by you on
behalf of the Contracts or Accounts (or any amendment or supplement to
any of the foregoing) (collectively, "Company Documents" for the
purposes of this Section 7), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to you by or on behalf of
the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
b. arise out of or result from statements or
representations (other than statements or representations contained in
and accurately derived from Trust Documents as defined below in Section
7(b)) or wrongful conduct of you or persons under your control, with
respect to the sale or acquisition of the Contracts or Trust shares; or
c. arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in Trust
Documents as defined below in
8
<PAGE> 9
Section 7(b) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of you; or
d. arise out of or result from any failure by you to
provide the services or furnish the materials required under the terms
of this Agreement;
e. arise out of or result from any material breach of
any representation and/or warranty made by you in this Agreement or
arise out of or result from any other material breach of this Agreement
by you; or
f. arise out of or result from a Contract failing to
be considered a life insurance policy or an annuity Contract, whichever
is appropriate, under applicable provisions of the Code thereby
depriving the Trust of its compliance with Section 817(h) of the Code.
2. You shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Trust or Underwriter,
whichever is applicable. You shall also not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified you in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify you of any such claim shall not relieve
you from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
you shall be entitled to participate, at your own expense, in the defense of
such action. Unless the Indemnified Party releases you from any further
obligations under this Section 7(a), you also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from you to such party of the your election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and you will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
3. The Indemnified Parties will promptly notify you of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
(b) INDEMNIFICATION BY THE UNDERWRITER
9
<PAGE> 10
1. The Underwriter agrees to indemnify and hold harmless you,
and each of your directors and officers and each person, if any, who controls
you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually an "Indemnified Party" for purposes of
this Section 7(b)) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses") to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the shares of
the Trust or the Contracts and:
a. arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in the Registration Statement, prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing)
(collectively, the "Trust Documents") or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission of
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to us by or on behalf of you for
use in the Registration Statement or prospectus for the Trust or in
sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
b. arise out of or as a result of statements or
representations (other than statements or representations contained in
the disclosure documents or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Trust, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Trust shares; or
c. arise out of any untrue statement or alleged
untrue statement of a material fact contained in a disclosure document
or sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to you by or on behalf of the Trust; or
d. arise as a result of any failure by us to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the qualification representation specified
above in Section 2(b)(7) and the diversification requirements specified
above in Section 2(b)(8); or
e. arise out of or result from any material breach of
any representation and/or warranty made by the Underwriter in this
Agreement or arise out
10
<PAGE> 11
of or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Sections 7(b)(2) and 7(b)(3) hereof.
2. The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to you or the
Accounts, whichever is applicable.
3. The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further obligations under this Section
7(b), the Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
4. You agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts or the
operation of each Account.
11
<PAGE> 12
(c) INDEMNIFICATION BY THE TRUST
1. The Trust agrees to indemnify and hold harmless you, and
each of your directors and officers and each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7(c)) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust, which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Trust, and arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise out
of or result from any other material breach of this Agreement by the Trust; as
limited by and in accordance with the provisions of Sections 7(c)(2) and 7(c)(3)
hereof. It is understood and expressly stipulated that neither the holders of
shares of the Trust nor any Trustee, officer, agent or employee of the Trust
shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
2. The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against any Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
you, the Trust, the Underwriter or each Account, whichever is applicable.
3. The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7(c), the Trust also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust to such party of the
Trust's election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the Trust
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
12
<PAGE> 13
4. You agree promptly to notify the Trust of the commencement
of any litigation or proceedings against you or the Indemnified Parties in
connection with this Agreement, the issuance or sale of the Contracts, with
respect to the operation of the Account, or the sale or acquisition of shares of
the Trust.
8. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. TERMINATION
(a) This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios for any reason by sixty (60) days
advance written notice delivered to the other parties, and shall terminate
immediately in the event of its assignment, as that term is used in the 1940
Act.
(b) This Agreement may be terminated immediately by us upon written
notice to you if:
1. you notify the Trust or the Underwriter that the exemption
from registration under Section 3(c) of the 1940 Act no longer applies,
or might not apply in the future, to the unregistered Accounts, or that
the exemption from registration under Section 4(2) or Regulation D
promulgated under the 1933 Act no longer applies or might not apply in
the future, to interests under the unregistered Contracts; or
2. either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that you have suffered a material adverse change in your
business, operations, financial condition or prospects since the date
of this Agreement or are the subject of material adverse publicity; or
3. you give us the written notice specified above in Section
3(c) and at the same time you give us such notice there was no notice
of termination outstanding under any other provision of this Agreement;
provided, however, that any termination under this Section 9(b)(3)
shall be effective forty-five (45) days after the notice specified in
Section 3(c) was given; or
4. upon your assignment of this Agreement without our prior
written approval.
(c) If this Agreement is terminated for any reason, except as required
by the Shared Funding Order or pursuant to Section 9(b)(1), above, we shall, at
your option, continue to make available additional shares of any Portfolio and
redeem shares of any Portfolio pursuant to all of the terms and conditions of
this Agreement for all Contracts in effect on the effective
13
<PAGE> 14
date of termination of this Agreement. If this Agreement is terminated as
required by the Shared Funding Order, its provisions shall govern.
(d) The provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 9(c), except that we shall have no further obligation
to sell Trust shares with respect to Contracts issued after termination.
(e) You shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"); or (iii) as permitted by an order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, you shall promptly
furnish to us the opinion of your counsel (which counsel shall be reasonably
satisfactory to us) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, you shall not prevent Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Contracts without first giving us ninety (90) days notice of your
intention to do so.
10. MISCELLANEOUS
(a) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
(b) This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
(c) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
(d) This Agreement shall be construed and its provisions interpreted
under and in accordance with the laws of the State of California. It shall also
be subject to the provisions of the federal securities laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive relief, and to the conditions of such orders. We shall promptly
forward copies of any such orders to you.
(e) The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer,
14
<PAGE> 15
agent or holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
(f) Each party to this Agreement shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
SEC, the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
(g) Each party to this Agreement shall treat as confidential all
information reasonably identified as confidential in writing by any other party
to this Agreement, and, except as permitted by this Agreement or as required by
legal process or regulatory authorities, shall not disclose, disseminate, or use
such names and addresses and other confidential information until such time as
they may come into the public domain, without the express written consent of the
affected party. Without limiting the foregoing, no party to this Agreement shall
disclose any information that such party has been advised is proprietary, except
such information that such party is required to disclose by any appropriate
governmental authority (including, without limitation, the SEC, the NASD, and
state securities and insurance regulators).
(h) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties to this Agreement are
entitled to under state and federal laws.
(i) The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided above in
Section 3(c).
(j) Neither this Agreement nor any rights or obligations created by it
may be assigned by any party without the prior written approval of the other
parties.
(k) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
15
<PAGE> 16
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Company: American General Annuity Insurance Company
By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
The Trust: Franklin Templeton Variable Insurance Products Trust
By:
------------------------------------------------
Name: Karen L. Skidmore
Title: Assistant Vice President, Assistant Secretary
The Underwriter: Franklin Templeton Distributors, Inc.
By:
------------------------------------------------
Name: [ ]
Title: [ ]
16
<PAGE> 17
SCHEDULE A
THE COMPANY
[name]
[address]
[state of incorporation]
[name]
[address]
[state of incorporation]
17
<PAGE> 18
SCHEDULE B
ACCOUNTS OF THE COMPANY
1. Name: [name]
Date Established: [date]
SEC Registration Number: 811-____
2. Name: [name]
Date Established: [date]
SEC Registration Number: 811-____
18
<PAGE> 19
SCHEDULE C
AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST; INVESTMENT ADVISERS
<TABLE>
<CAPTION>
Franklin Templeton Variable Insurance Products Trust Investment Adviser
- ---------------------------------------------------- ------------------
<S> <C>
</TABLE>
19
<PAGE> 20
SCHEDULE D
CONTRACTS OF THE COMPANY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
CONTRACT 1 CONTRACT 2 CONTRACT 3
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT NAME
- ----------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N)
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE FORM
NUMBERS
- ----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
NAME/DATE ESTABLISHED
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS AND CLASSES
- -ADVISER
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
SCHEDULE D CONT.
CONTRACTS OF THE COMPANY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
CONTRACT 4 CONTRACT 5 CONTRACT 6
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONTRACT/PRODUCT NAME
- ----------------------------------------------------------------------------------------------------------------------------
REGISTERED (Y/N)
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
REPRESENTATIVE FORM
NUMBERS
- ----------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT
NAME/DATE ESTABLISHED
- ----------------------------------------------------------------------------------------------------------------------------
SEC REGISTRATION NUMBER
- ----------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS AND CLASSES
- -ADVISER
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
SCHEDULE E
OTHER PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
[names of other portfolios]
22
<PAGE> 23
SCHEDULE F
[REDACTED]
23
<PAGE> 24
SCHEDULE G
ADDRESSES FOR NOTICES
To the Company: [ ] Insurance Company
[address]
[address]
Attention: [name, title]
To the Trust: Franklin Templeton Variable Insurance Products Trust
777 Mariners Island Boulevard
San Mateo, California 94404
Attention: Karen L. Skidmore
[title]
To the Underwriter: Franklin Templeton Distributors, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
Attention: [name, title]
24
<PAGE> 25
SCHEDULE H
SHARED FUNDING ORDER
25
<PAGE> 1
EXHIBIT 8(xiii)
Franklin Templeton Services, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94404
Re: Administrative Services Agreement
Gentlemen:
This letter sets forth the agreement (the "Agreement") between American General
Annuity Insurance Company (the "Company") and Franklin Templeton Services, Inc.
(the "Fund Administrator") concerning certain administrative services with
respect to the series (each a "Fund") of Templeton Variable Products Series Fund
(the "Trust"), as specified in the Participation Agreement identified below, as
of May 1, 2000.
1. Administrative Services and Expenses. Administrative services for the
Company's Separate Accounts (the "Accounts") with respect to their ongoing
investments in the Funds pursuant to the Fund Participation Agreement, as
amended from time to time, among the Company, the Trust, and Franklin Templeton
Distributors, Inc. (the "Underwriter"), among others, dated May 1, 2000 (the
"Participation Agreement"), and administrative services for purchasers of
variable life and annuity contracts (the "Contracts") issued through the
Accounts, are and shall be the responsibility of the Company. Administrative
services for the Funds in which the Account invests, and for purchasers of
shares of the Funds, are and shall be the responsibility of the Fund
Administrator or its affiliates.
2. Administrative Expense Payments. The Fund Administrator recognizes the
Company, on behalf of the Accounts, as the shareholder of shares of the Funds
purchased under the Participation Agreement on behalf of the Accounts. The Fund
Administrator further recognizes that it will derive a substantial
administrative convenience by virtue of having the Company be the shareholder of
record of shares of the Funds purchased under the Participation Agreement,
rather than multiple shareholders having record ownership of such shares. The
Fund Administrator recognizes that the Company will provide administrative
services necessary to facilitate investment in the Funds.
3. Nature of Payments. The parties to this letter agreement recognize and agree
that the Fund Administrator's payments to the Company relates to administrative
services only and do not constitute payment in any manner for investment
advisory services or for costs of distribution of Contracts or of shares of the
Fund, and that these payments are not otherwise related to investment advisory
or distribution services or expenses. The amount of the payments made by the
Fund Administrator to the Company pursuant to Paragraph 2 of this letter
agreement will not be deemed to be conclusive with respect to actual
administrative expenses incurred by the Company or savings of the Fund
Administrator.
4. Term. This letter agreement will remain in full force and effect from the
date of this Agreement specified on page 1, for so long as any assets of the
Funds are attributable to amounts invested by the Account under the
Participation Agreement, unless terminated in accordance with Paragraph 5 of
this letter agreement. In accordance with the Participation Agreement, the
<PAGE> 2
fee described in Paragraph 2, above, will continue to be due and payable with
respect to the shares attributable to Contracts existing and in effect on the
date this letter agreement is terminated pursuant to Paragraph 5, below.
5. Termination. This letter agreement may be terminated upon either (1) thirty
(30) days' written notice from one party to the other; or (2) upon cessation of
investment by the Account in the Fund pursuant to the Participation Agreement.
6. Amendment. This letter agreement may be amended only upon mutual agreement of
the parties hereto in writing.
7. Counterparts. This letter agreement may be executed in counterparts, each of
which will be deemed an original but all of which will together constitute one
and the same instrument.
8. Entire Agreement. This letter agreement, together with the attached Schedules
or attachments, contains the entire agreement among the parties and supersedes
any prior or inconsistent agreements, understandings or arrangements among the
parties with respect to the subject matter of this letter agreement, all of
which are merged herein.
9. Arbitration. In the event of a dispute concerning any provision of this
Agreement, either party may require the dispute to be submitted to binding
arbitration under the commercial arbitration rules of the American Arbitration
Association. Judgment upon any arbitration award may be entered by any court
having jurisdiction. This Agreement shall be interpreted in accordance with the
laws of the state of Florida and shall be subject to any applicable federal
securities laws.
<PAGE> 3
If this letter agreement is consistent with your understanding of the matters we
discussed concerning administrative expense payments, kindly sign below and
return a signed copy.
Very truly yours,
American General Annuity Insurance Company
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
ATTEST:
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Agreed:
FRANKLIN TEMPLETON SERVICES, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 4
SCHEDULE A
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 18, 2000 as to the American General Annuity
Insurance Company and as to A.G. Separate Account A (formerly AGA Separate
Account A) in Post-Effective Amendment No. 1 to the Registration Statement (Form
N-4, Nos. 333-70801/811-8862) of the A.G. Separate Account A.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Houston, Texas
April 14, 2000
<PAGE> 1
EXHIBIT 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Kent E. Barrett
----------------------
Kent E. Barrett
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ John A. Graf
----------------
John A. Graf
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company, ("AGAIC") a life
insurance corporation organized and existing under Chapter 3 of the Texas
Insurance Code, does hereby constitute and appoint John A. Graf, Kent E.
Barrett, and Mary L. Cavanaugh, and each of them, with full power of
substitution as his true and lawful attorney and agent, to do any and all acts
and things and to execute any and all instruments which said attorney and agent
may deem necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Bruce R. Abrams
-------------------
Bruce R. Abrams
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company ("AGAIC"), a life
insurance corporation organized and existing under Chapter 3 of the Texas
Insurance Code, does hereby constitute and appoint John A. Graf, Kent E.
Barrett, and Mary L. Cavanaugh, and each of them, with full power of
substitution as his true and lawful attorney and agent, to do any and all acts
and things and to execute any and all instruments which said attorney and agent
may deem necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Rebecca G. Campbell
-----------------------
Rebecca G. Campbell
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company ("AGAIC), a life
insurance corporation organized and existing under Chapter 3 of the Texas
Insurance Code, does hereby constitute and appoint John A. Graf, Kent E.
Barrett, and Mary L. Cavanaugh, and each of them, with full power of
substitution as his true and lawful attorney and agent, to do any and all acts
and things and to execute any and all instruments which said attorney and agent
may deem necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Robert P. Condon
--------------------
Robert P. Condon
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of American General Annuity Insurance Company ("AGAIC"), a life
insurance corporation organized and existing under Chapter 3 of the Texas
Insurance Code, does hereby constitute and appoint John A. Graf, Kent E.
Barrett, and Mary L. Cavanaugh, and each of them, with full power of
substitution as his true and lawful attorney and agent, to do any and all acts
and things and to execute any and all instruments which said attorney and agent
may deem necessary or advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "AGAIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
AGAIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said AGAIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said AGAIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said AGAIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
AGAIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Carl J. Santillo
--------------------
Carl J. Santillo
In the Presence of:
/s/ Cheryl G. Hemley
